Car Hire Excess Cover Explained
Many holidaymakers purchase car hire insurance excess cover from their car hire company. But buying a separate Excess Reimbursement Insurance (ERI) could be much cheaper - and offer better cover.
Renting a car abroad
Hiring a car while on holiday gives you the freedom to explore as and when you wish. But what if your hire car gets damaged, as a result of your own actions or someone else's?
The good news is that when hiring a car in Europe the rental cost will include basic insurance. This means you won't be liable for the full cost should the vehicle be stolen or damaged.
The bad news is that this cover is subject to an 'excess', meaning you could be required to pay a contribution of up to £2,500.
This would be payable no matter who is at fault.
Car hire excess insurance cover
Car hire excess insurance gives you the peace of mind that if your hire vehicle is stolen or damaged, you won’t need to pay any excess.
You have two car hire excess insurance options:
Buy from the rental company
You can buy car rental excess insurance cover from your car rental company. This goes by many names, including super collision damage waiver (SCDW), damage waiver, and excess waiver.
This normally reduces the excess down to zero, but it is the most expensive option and may not offer very good cover. You will be offered this at the rental desk, unless you bought it when you booked the car online.
Buy from a third-party insurer
Many insurance specialists offer Excess Reimbursement Insurance (ERI), which is similar to the policy you would buy from the hire firm, but is considerably cheaper and often offers better cover.
You can buy this online before your trip begins.
You would need to pay the excess to the rental firm, but you can claim this back later on.
You can buy ERI on a daily or monthly basis.
Rental firm insurance vs third-party ERI
Car rental excess insurance cover (sometimes called Super Collision Damage Waiver - SCDW) from your car rental firm will reduce the excess down to zero - or near-zero. But it is the costliest option.
According to Which?, "SCDW cost £142 more on average than third party cover, but it also offers less comprehensive cover."
By contrast, purchasing an ERI policy from a third party will be cheaper and cover things like windscreen and tyre damage, putting the wrong fuel in the vehicle, and having to cut short your hire period. However, always read the fine print of any policy.
There are only two minor advantages to purchasing insurance from your rental firm: you can buy it when you book your rental, saving time; and there won’t be a large pre-authorization sum blocked on your card - which could be more than 2,000 euros with some low-cost ERI operators. This could be an issue for those with a low credit card limit or debit card funds.
Avoid the hard-sell at the rental desk
On mainland Europe it is not uncommon for car hire customers to get the ‘hard sell’ at the rental desk, where they are pressured to buy SCDW from the firm.
As noted, this is much more expensive than third-party policies.
Some customers may be given the impression that any third party ERI policy they have bought is not valid, leaving them open to the full excess costs. But this is not the case; a third-party ERI is completely valid.
An undercover investigation by Which? highlighted that high pressure selling a big problem in Spain. Some readers have even been told they could not take the car unless they bought the company's own cover.
Agents may emphasise the high costs of damage to bodywork or tyres, with the aim of getting you to buy their cover.
It's important to arm yourself with the facts, and resist the ‘patter’ from the sales agent - who may be making a commission for any add-ons they sell.
Examples of lies told to customers by rental firms:
“If you don’t buy our cover, you'll only have third party protection.”
Most terms and conditions reveal compulsory basic insurance will cover the vehicle for collision, theft, fire and vandalism, with an excess payment.
“Your own third-party cover is not valid.”
This is inaccurate. If you cause damage to the hire car, you pay the rental firm's bill then make a claim from your third-party insurer.
“Your insurer will only return the deposit; you are responsible for any damage to the vehicle.”
This is not true. Third party excess will cover costs of up to several thousand pounds.
“If you don't buy our cover, you cannot take the car.”
Excess waiver insurance is always optional.
“We seldom refund the full deposit due to the "crazy" way locals drive - i.e. your car is almost certain to get damaged.”
This lie is often told alongside the suggestion that your own third-party cover won't be sufficient. This is not true.
“You can't drive off-road without our cover; and the best beaches are at the end of rough tracks.”
This is simply a scare tactic designed to make you buy their cover.
Things to watch out for when hiring a car
Know that budget hire firms, having lured you with a cheap car hire deal, are desperate to sell you add-ons like SCDW. This is part of their business model.
Cheaper hire firms tend to require bigger deposits, perhaps as high as £2,500. This may be used as a scare tactic; ‘take our insurance, or your money is at risk’.
It may be better to hire from a well-reviewed car hire firm, as opposed to a less well known, cheaper one.
Some unscrupulous hire firms say you'll have to pay a very large sum even for something as simple as a scratch.
Hire firms may also say that claiming back from your third-party insurer is a huge hassle, suggesting you would have to do things like get the rental contract translated into English. This is all to create the impression that their policy is the easier, safer option.
Common questions about car rental excess cover
Does car hire excess insurance cover scratches?
In most cases car hire excess cover will cover scratches. But read the small print to be sure.
Does travel insurance cover rental car excess?
Some travel insurance providers will cover rental car excess costs, or offer it as an optional extra. Read the small print to be sure.
Does car hire excess insurance cover theft?
Car rental excess cover will cover you for the excess the rental firm can charge you if the hire car is stolen. But always read the terms and conditions.
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