Hiring a car gives you the freedom to travel on your own terms, but understanding car hire excess insurance can save you hundreds of pounds if something goes wrong.
After you book a car, you'll usually be asked if you want to upgrade or add on extras. Do you need GPS? A baby seat? There's a lot to think about and you might be tempted to decline everything to avoid extra costs.
But car hire excess insurance is something you should seriously consider, especially if you're planning on hiring a car abroad. This guide explains everything you need to know about car hire excess insurance, from what it covers to how much it costs.
Just like your personal car has insurance to cover crash damage, rental cars also have insurance. However, you'll need to pay an excess – the amount you pay out of your own pocket before insurance covers the rest of the repair costs.
With your own car, you might choose to ignore small damage if it doesn't make sense to pay the excess. But when it's a rental car, you'll be asked to pay that money no matter how small the scratch, chip or dent.
Car hire excess insurance covers this excess payment. If you take out this additional policy, it will reimburse you for the excess you have to pay to the rental company.
While car insurance is a requirement to be on the roads, car rental excess insurance isn't a necessity. But, like with many forms of insurance, it can be nice for your peace of mind.
If you're hiring a car in Italy or somewhere else where the roads and driving styles aren't what you're used to, it can be reassuring to have extra coverage. Knowing that your bank balance is safe no matter what happens can help reduce the stress of being on the road, leading to a more enjoyable holiday.
Consider car hire excess insurance if you're:
Travelling abroad and unfamiliar with local roads
Driving in busy cities or challenging conditions
Renting a car for an extended period
Looking for peace of mind during your trip
Every policy is different, so finding the best car hire excess insurance changes by person. As a rule, they cover the cost of excess for rental cars, but not everything is always included.
Most policies have limits on trip lengths, normally around 60 days. Some policies will have a financial limit too – typically between £6,000 and £10,000.
There are three common problems that not all policies include:
A lost or missing key isn't always a default choice, and it's one that often comes with a smaller limit.
Covering the cost of using the wrong fuel (e.g. putting diesel in a petrol car) might not be fully covered.
Damage to tyres, windscreens and the underbody might not always be fully covered either.
Always read the policy details carefully to understand what's included and what's not.
Like with other types of car hire insurance, you pay per day. Every company will charge differently based on factors like driver's age, where in the world you are and the type of vehicle you're driving.
If you need to make a claim, here's how it typically works:
Report the damage to the rental company as soon as you discover it.
Pay the excess to the rental company (you'll usually need to pay this upfront).
Gather documentation including the damage report, receipts and photos.
Submit your claim to your excess insurance provider with all supporting documents.
Receive reimbursement. Most providers process claims within 10–14 days.
Sometimes you may need to make the payment initially and then receive the money back later on, but once the claim is complete you'll be no worse off (other than your daily insurance costs).
With excess payments often in the hundreds, paying a much smaller cost over a short holiday generally makes sense.
You have two main options when buying car hire excess insurance: through the rental company at the desk or from a third-party provider in advance.
Pros:
Convenience – you can add it when you collect the car
Immediate coverage with no paperwork to submit later
No need to pay excess up front and claim it back
Cons:
Expensive (can be double or triple the daily cost of third-party insurance)
High-pressure sales environment at the rental desk
Limited time to compare options
Pros:
Much cheaper versus the cost of insurance offered by the rental company
Time to compare policies and read terms carefully
Annual policies offer excellent value for frequent travellers
Cons:
You'll need to pay the excess upfront and claim it back
Requires keeping receipts and submitting a claim
Slightly more admin if something goes wrong
For most travellers, third-party insurance offers significantly better value. Looking at third-party providers can often save you money, so long as they cover the right things.
There are two main benefits of taking out car hire insurance excess cover.
If you have an accident in a rental car, you will likely pay hundreds of pounds. If you're lucky, it may be around £500. More likely, you'll pay £1,000 or more. Paying (normally) less than £10 a day to get rid of that payment makes a lot of sense to someone who's just been in an accident – or had their car damaged while they've been nowhere near it.
If you're worried about the cost of excess, it's going to play on your mind. Not just while you're driving, but generally throughout your holiday. And if something does happen to your car, it can ruin the rest of your trip knowing you have a huge bill coming.
Nowadays, most car hire agencies will try to sell you excess insurance as an upgrade. It's not normally the best deal, but it is very convenient to get everything through one place.
If you travel a lot, you can sign up for an annual policy with some providers. They'll have certain limits – like the length of an individual trip – but generally they're good value for money. An annual premium for car hire excess cover across Europe typically costs about half the price of a single week's cover from a rental company.
Always compare policies before you travel to ensure you're getting the best deal for your needs.
Yes. You can purchase standalone car hire excess insurance from third-party providers, often at a much lower cost than buying it from the rental company. You can buy it online before your trip or even after you've booked your car.
It's best to purchase excess insurance before you collect your rental car. This gives you time to compare policies and find the best deal. Buying in advance also means you won't feel pressured at the rental desk.
Some premium credit cards include car hire excess insurance as a benefit. However, coverage varies significantly between cards and may have exclusions. Check your card's terms carefully and ensure the coverage is sufficient for your needs before relying on it.
Collision Damage Waiver (CDW) is the basic insurance that comes with most rental cars. It covers damage to the vehicle, but you still have to pay an excess. Excess insurance is an additional policy that covers the excess amount you'd have to pay under the CDW.
Your personal car insurance typically doesn't cover rental cars, especially abroad. Always check your policy documents, but in most cases you'll need separate cover for rental vehicles.
Car hire excess insurance offers valuable protection against unexpected costs during your trip. Whether you choose rental company insurance for convenience or a third-party policy for better value, having this cover means you can focus on enjoying your holiday rather than worrying about potential bills.
If you travel frequently, an annual policy can provide excellent value and peace of mind throughout the year. For occasional trips, a standalone policy for each rental still offers significant savings compared to rental company rates.
Although there's great value to be had with third-party insurance policies, booking a hire car for your next holiday is a great way to see a bit more of a country while you're there.
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