Car hire insurance - a complete guide
You may take it for granted that any hire car comes with insurance included. But that isn't always the case. Our guide to car hire insurance explains all.
- What does standard car hire insurance cover?
- Car hire excess insurance explained
- What to look for when hiring a car abroad
It’s impossible to hire a car without insurance. When you walk into a car hire location or book online, the price you are quoted will include insurance - no car hire firm will hand over the keys without it.
The important point is that car hire companies will try to get you to buy their own additional insurance. If you don’t take out their policy, you normally have to leave a large deposit and any damage will be taken out of that deposit.
This is usually given as the insurance excess, which can be anything from £500 to £2000 or more. It’s not a surprise then that many people take this option, as they would rather pay a little extra for each day of hire and avoid the large deposit.
You are not obliged to take this ‘extra’ insurance from the car hire company. Depending on the company, they may suggest it is essential, or recommended, or even try to scare you with the prospect of big bills if there is any damage - but you are under no obligation to take it.
What's covered by car hire insurance?
In the UK we have four levels of insurance and most parts of the world operate in a similar way. There are countries where car insurance is not a legal requirement - these are the places where you, as a visitor using the roads in someone else's vehicle, really want the best cover you can get.
The minimum legal requirement is called road risks and as a rule you cannot buy a policy operating on this basis for personal use. It's for traders, mechanics and commercial fleets, but excludes cover for passengers and contents as well as the vehicle itself.
Third-party insurance is the basic level of cover you need to drive a car or van hire company in most countries. This covers damage to other road users, and passengers in any vehicles involved. The hire company will have all their vehicles insured to this level regardless of driver.
In Britain you're generally safe to assume people involved in an accident will be covered since the NHS will be providing emergency services and that vital first response. In other countries, you could find yourself being billed for even a simple ambulance to hospital.
Hiring a car when travelling - added charges
Most hire firms will include or offer 'loss damage waiver' and/or 'collision damage waiver'. LDW and CDW are considered add-ons to the minimum legal requirement in a given country, respectively upgrading cover to third party and theft, or comprehensive levels.
These usually come with a high excess amount, which you can inevitably pay a fee to reduce or remove entirely. This is what you're buying when you take out hire car insurance - an alternative to the firms' own policy upgrade.
Hiring a car from a private individual
There is another scenario where you may need hire car insurance. Peer-to-peer hire platforms, like Air BnB for cars, are springing up globally where you can hire someone's private car - from classics to camper vans and everything in between.
You may want to get appropriate short-term insurance to cover that car – particularly if you don't currently hold an insurance policy in your own name with third-party extension. The default insurance may have exclusions that could result in you not being covered.
Hire car insurance overseas
There are many reasons to hire a car, but unlike the ritual of finding a cheap van for a house move, for many drivers it will be the first thing they need when they set foot in a different country.
From Continental road trips to exploring America's highways and expansive landscapes, a hire car is a great way to discover another culture without the constraints of a tour group, or the anxiety of taking your own vehicle overseas.
If nothing else, hiring a car avoids the discomfort and potential hazards of driving on the right in a right-hand-drive vehicle. Pretty much everywhere you could reasonably drive and take a ferry to outside of Great Britain and Ireland has adopted left-hand drive.
Every country has different rules for car insurance and liability for medical treatment, so it's worth familiarising yourself with how the risks are defined and what consequences there may be in an accident.
Even if it's not your fault, many hire companies will treat an accident as a claim on their own insurance first, so any excesses or penalties may be due and theoretically, recoverable, when making a claim.
In all cases the greatest risk is not liability for the car, but liability for damage caused to people and property. Medical care and rehabilitation for victims of accidents can be immensely expensive in some parts of the world. Even your own treatment may not be sufficiently covered by travel insurance.
Car Hire Excess Recovery Insurance providers
- Most European policies only cover the excess - collision damage waiver is assumed
- Worldwide policies may charge extra to extend cover if you hire without CDW
- Some policies can cover Car Club and UK rentals as well
You have three choices when buying car hire excess insurance. Independently, from a broker such as those listed below, as part of a package when booking through an agent or comparison site, and directly from the car hire company (the typical 'waiver' options you're offered when hiring a vehicle). If hiring in America, you may be tempted to skip the collision damage waiver or CDW.
Without CDW you are potentially liable for the full value of the vehicle. Many of these insurance excess policies only cover the excess if you have taken the basic CDW from the rental company – but, when renting in Europe you're unlikely to get a car without CDW.
Where Excess Recovery Insurance is more likely to be of use is in the event of minor damage, misfuelling or losing the keys. For the best deal you will want to compare the cost of cover from the rental firm, travel agent and independent providers, and inevitably, if you choose to buy completely independently of your travel agent or car hire company you'll probably get the best cover - if not the cheapest price.
If you travel often and hire cars in different countries, annual policies can offer significant savings.
Although the upgraded collision damage waiver or similar cover purchased from the car hire company is the worst value, it may reduce your up-front costs and liabilities such as pre-authorised excess amounts held on your credit card. Third-party car hire excess insurance requires that you pay the excess, then reclaim the costs, and those claims need to be within the policy limits.
With the firms listed below the highest value of vehicle covered is £120,000 – and most are much lower. So if you're thinking of turning down the full collision damage waiver option on a supercar hire, you might want to double-check the values and limits first. Note that many policies exclude minibuses and motorhomes as well.
None of these policies cover road risks, they are just insurance to reimburse your excess payments n the event of a claim.
The best car hire excess insurance firms
There are many products on the market, generally underwritten by a small group of firms. These are the best providers offering competitive short trip rates, generous allowances for smaller incidents rather than accident excess payments, and additional benefits for drivers hiring cars in the UK as well as for overseas trips.
Cover4Rentals
- From £14 for a week of European cover
- Up to £108 for a fully-featured annual family policy
- High claim limits for misfuelling and other deductions
Cover4Rentals covers single trips or annual cover for multiple hires. Different levels of cover are available with prices ranging from £14 for a short European trip. up to £108 for family cover and multi-trip up to 61 days in the year, including collision damage waiver claims and any household member renting an applicable vehicle.
International travel defaults to Gold cover with higher limits, but the difference between Gold and Silver for European cover is just a £2 or so for a week. Vehicle value is capped at £65,000, with a claim limit of £10,000.
Worldwide Insure
- Excellent value for annual cover
- Highest overall claim limit on offer
- Less competitive for short hires
Worldwide Insure offers a number of insurance products, not just car hire excess cover, but they are one of the few excess cover firms to offer a claim limit high enough to cover a whole vehicle at £50,000. They cap the vehicle value covered at £50,000 as well, and have average limits for misfuelling, keys and belongings. Rates begin around £24 per week - but the annual cover allows 60 days of hire for £69 worldwide including UK hires, with multiple drivers and personal accident cover as well.
ReduceMyExcess
- Around £20 for a week of European cover
- Up to £124 for the highest, annual family cover
- High claim limits for most excess payments
Along the same lines as Cover4Rentals, ReduceMyExcess offers low-cost annual or single trip packages from a single day, up to 62 days on an annual policy. The prices are similar – generally a little higher, but still getting a high level of cover with ample claim limits for typical policies. Despite slightly higher fees, the claim limits for misfuelling, personal belongings and lost keys are lower than some other firms. Vehicle cover is capped at £65.000, and the claim limit is £10,000.
Questor Insurance
- Good value for annual packages with flexible upgrade options
- Provides cover for Car Clubs, such as classic car schemes
- Transparent, easy price and quote structure
For drivers who hire cars in the UK, Questor offers an appealing blend of worldwide flexibility and UK hire benefits as well. The basic 30-day, worldwide cover is around £55, however upgrades are available for around £20-30 each for collision damage waiver (claim/vehicle value up to £75,000), Car Club cover and specialist options for young drivers, vans and motorhomes.
As an example, a week's motorhome excess insurance for a worldwide rental is just under £12, but it has a claim limit of £2500 so make sure you have sufficient levels of CDW and accident insurance included first.
Swinton/insurance4carhire
- Highest value of vehicle insured, at £120,000
- Relatively high weekly rate, around £35 for Europe
- Relatively low overall claim limit
Well-established brokers Swinton offer a car hire excess policy via the snappily-titled insurance4carhire brand, which gives you a year of European cover for £48, or worldwide cover with additional insurance for third-party medical claims (Supplemental Liability Insurance) for £125. The maximum claim value for excess cover is £6500, and while the policy does apply to vehicles up to £120,000 value it does not cover motorhomes or commercial/large passenger vehicles.
Worldwide cover from Swinton does provide a comprehensive package if you hire cars in the USA, but as always with excess recovery insurance you need to take out the rental company insurance package, then claim your costs – this is not a replacement for car insurance.
iCarHireInsurance
- Low-cost annual European cover with UK cover option
- Includes some cover for hotel and delay expenses
- Some damage exclusions apply, weekly rates are less competitive
You may want to check icarhireinsurance.co.uk if you want a low-cost annual plan for European cover – our sample quote was just £44.95 including UK hire and allowing up to nine named drivers on the rental policy. The claim limit is £7,500, and vehicles up to £100,000 excluding off-road and more than nine passenger options.
Travel agencies offering excess recovery insurance
Booking.com
- Costs roughly twice as much as independent packages for a week
- Higher total claim limit
- May be discounted with other services
Putting together a complete package with popular travel site Booking.com? Partner site rentalcars.com provides the transport. You can add on excess recovery insurance, but it is more expensive than simply going to a third party provider in the first place. The claim limit is £20,000 – but it doesn't include personal belongings.
Zest Car Rental
- Zest offers a comparison between hire car providers
- It also offers its own collision damage waiver and excess insurance
- Overall, it's a competitive package
Zest Car Rental is a hire car comparison site that makes it easy to find a vehicle no matter where you're travelling, bringing all the local operators together as a single price comparison. At least, that's the theory. In some locations you may find the operators are just the usual global chains, so do check your prices before booking.
If the hire car package is good, then Zest's additional excess recovery insurance is a convenient option. At around £35 for a week's European cover it isn't too much more than most independent offerings, and the claim limit of £10,000 is average, but encompasses generous allowances for misfuelling or lost keys. It's a much better package than that offered by rival comparison site Wisecars.
HolidayExtras
- Cheap additional cost for excess recovery insurance
- Competitive claim limits
- Not the best reputation for service
If you're already booking through HolidayExtras, the additional collision damage waiver and excess cover is competitively priced and offers average claim limits, but it doesn't have the best reputation for customer service which suggests a slow claims process. Even so, when buying insurance you really hope that statistically, you won't need it – this is a good option if you're a careful driver and are feeling confident things will go well.
The similarly-named website HolidayAutos is not related, and the claim limits are low with relatively expensive policy rates.
Expedia
- Lower cost, but lower claim limits
- Poor value unless heavily discounted in a promotion
- Very low key cover, no misfuelling cover
It's hard to see any reason to choose Expedia's insurance package. It's expensive compared with independent providers and the claim limits are unusually low, with no provision for misfuelling or personal belongings.
Car Hire Excess Insurance - what you're really buying
When you think of hire car insurance, what you usually buy is car hire excess insurance. It's not the cover to make the car legal, it's cover to insure you against the costs of an accident or damage to the vehicle.
Car hire firms naturally have their own fleet-wide cover, so you're insuring yourself against the charges and costs they would seek to recover and any liability from third parties they may pass on to you.
In countries like America, that latter part is really important. You don't want to be on the hook for an injured party's medical bills and recovery. Packages aimed at visitors from overseas may already include suitable cover but if renting a car as a domestic customer, check the cost of 'Additional Liability Insurance' or ALI.
This is the one that provides some protection from lawsuits and other aspects of an accident, alongside 'Personal Accident Insurance' which is for yourself and those travelling with you.
Nearly all car and van hire firms will sell a package of 'waivers'. Usually there is a default level included that insulates you from the real costs of an incident, but with a massive excess to pay which may even be held as a deposit on your credit card.
Unless, of course, you take their insurance.
Only a small extra daily charge – or is it? How do you know if the charge is fair? Typical car hire insurance fees can add £8 to £25 per day, depending on the type of car and age of drivers as well as the location. But you may not need all of the upgrades, or any at all, if you have already purchased appropriate cover.
Van hire excess insurance explained
When hiring a van in the UK you probably just look at the price, tick the boxes and go for the cheapest deal. Most of the time that's enough – but you may want to check the small print, as van hire excesses can be very high.
Not only could you face a bill of up to £1500 in the event of a claim, you might find that any belongings or other expenses aren't covered the way they would be with your own policy.
Most van hire firms offer an excess waiver package of their own, but it is likely to have exclusions. For example, Arnold Clark's excess on cars and vans is the aforementioned £1500 and their insurance excess waiver is £20 per day.
If you take the waiver, you would still need to pay for repairs (or the full excess) in the event of misfuelling, hitting low branches or bridges, hitting standing water/flooding, damage to the interior, or recovery of the vehicle if there is no other vehicle involved.
Not only will a typical van hire excess insurance cost half the amount per day, it will usually cover costs of misfuelling, windscreen replacement, damage from attempted theft or vandalism and tyre damage.
