Car Hire - Insurance Damage Excess - UK

Most car hire companies have a damage excess as a condition of their car rental insurance. A large percentage of car hire cost to the car rental company is taken up by the cost of insuring the car. To reduce their costs they have an excess amount on their policies.

The excess amount relates to the "collision damage waiver" part of the insurance cover. The excess amount is for damage to the rental car. The amount of excess can vary depending on the size of the car and the car rental company but is likely with the major companies to be in the region of GBP 600.00.

When you arrive at the rental location you will given the opportunity to purchase cover for the eventuality that the vehicle is damaged and you are liable for part of the cost of repair.

There is usually more that one product offered. The products might differ in the amount the excess is reduced by. Some will, for example, only reduce the liability to GBP 200.00 whilst others will reduce the policy to zero. Some of the policies might have personal accident cover included. An example of the cost of reducing the excess to zero would be GBP 13.00 per day on top of your rental cost.

You are not obliged to purchase any of these products. However you should be aware if damage is discovered on the car when you return and there was no record of that damage being on the car prior to your rental, you could have as much as GBP 600.00 taken from your credit card. The cost of repair is usually assessed by the rental staff who are given guidance on what to charge for a particular type of damage.

There are insurance products in the market place that will provide cover for the possibility that money is taken from your card. The cost can be significantly cheaper than products offered by the car rental company. If you purchased a product from an independent supplier you would decline the waiver offered by the car rental company.
If the vehicle was damaged the car rental company would deduct the cost as normal from your credit card, but you would then be able to claim it back on your insurance policy.

Some credit card companies, particularly in North America, have car rental insurance for platinum and gold card holders. This insurance is usually to cover damage to the car, but not the third party risk. This can reduce the cost of the rental. However, if for example a car was rented on the basis of this insurance and the car was damaged to the extent that it was "written off" for repair purposes. The car rental company could take the total cost of replacing the car from your credit card. You would then have to claim that cost back from your credit card insurance.

It may be that actual cost of repair to the car is less than the amount charged to your credit card. It would advisable to contact the company's insurance department after the car has been repaired if you think this may be likely. You may have any difference in repair amounts paid back to you.

In the event of damage, the car rental company will take the money from your credit card regardless of whether a third party may be responsible. If at a later stage the car rental company are able to recoup money from the third parties insurance, then you would be entitled to ask the amount taken from you was refunded.

Do I Need a Damage Liability Waiver?

When you rent a car, you take on full responsibility for any loss or damage suffered by the vehicle whilst it is in your care. A damage liability waiver partially reduces - or "waives" - your liability for such loss or damage. It is an agreement between you and the owner of the hired vehicle that your liability is partially waived in this way, rather than an insurance policy in the strict sense of the term (though most people will reasonably see it as such). The easy answer to the question of whether or not you need damage liability waiver, therefore, is that is not essential - but you would be landed with full responsibility for any loss or damage that happens to the vehicle, and this could potentially be as much as the replacement value (a lot of money, in other words).

Most rental companies, therefore, will want to protect their investment in the vehicle by insisting that you have an adequate damage liability waiver or its equivalent. Many will include the cost of providing the waiver in the quoted cost of renting the vehicle. Where this is the case, however, it is important not to be misled into thinking that this totally absolves you from any financial responsibility for damage to the car. There are important exclusions usually attached to such agreements.

Damage to the windows or glass, the tyres and wheels, and the roof and underside of the vehicle, for example, are all areas most often excluded, yet these happen to be areas that are among the most vulnerable to damage. Since they are excluded from the damage liability waiver, this means that you could end up paying for the whole repair bill in the event of damage.

It is also important to remember that the damage liability waiver is almost always only a partial waiver. The agreement includes an excess amount excluded from the waiver that remains the responsibility of the hirer of the vehicle. The amount of excess is likely to vary from rental company to rental company and from one country to another - but is still a significant amount. In Europe as a whole, it might be several hundred pounds, but in the UK it is frequently £600 and in Australia, for example, it can be as much as £1,500. Just like the excess on a regular insurance contract, the damage liability waiver excess is the first part of any claim for loss or damage. To take the UK example of £600, this means that if repairs for any damage cost, say £500, the hirer of the vehicle will end up paying the whole of the bill.

Given the size of the hirer's remaining liability under the damage liability waiver, therefore, it is also possible to insure either a part or the whole of the excess, thus reducing the risk. This separate cover for the excess is likely to be sold by the rental company itself, but there are a number of specialist car hire insurers that offer more competitively priced products. Standalone excess insurance from an independent provider, therefore, is certainly worth considering.