Car hire insurance has two basic roles. The first is to provide cover for damage to or loss (normally including theft) of the car. This is known as collision damage waiver (CDW) or loss damage waiver (LDW) and you can also buy additional daily car hire excess insurance to supplement this cover. The second known as Third Party insurance and provides cover for claims for damages made against you by a third party.

What’s included?

Many car hire companies will rent a car to you with insurance in place that meets the minimum requirements of the country you intend to drive in.

Different countries have different minimum standards, so when you pick up the keys you may have all that is legally required to drive in that country.

What you may not have though is protection against having to pay for repairs or replacement of things that are not covered by your standard insurance and this is why you may need to consider daily car hire excess insurance.

CDW or LDW rarely provides 100% cover for two basic reasons.

The first is that CDW generally carries an excess. This represents the amount of money that you would be responsible for paying towards bills relating to damage or theft of the rental car. Daily car hire excess insurance may therefore be needed to provide cover in the event that you are asked to pay the excess.

Excess amounts vary from company to company and country to country but they tend to be between £500 and £1600.

The second reason is that most policies of this type typically exclude certain parts of the car from their cover. This means that if they get damaged, you are responsible for paying for the repairs. Typically these parts are the under body, tyres and glass.

Driving in the USA

The position in the USA is slightly different to that in the UK and Europe when it comes to car rental insurance. Typically when you rent a car in the US, there may be little or no insurance included in the price at all. Without any additional or top-up insurance, you may then be responsible for most if not all costs relating to the car damage or loss. This could in theory be anything up to the value of the car itself.

Daily car hire excess cover

Car hire companies recognise that many people may find the risks associated with having to pay the excess to be unacceptable. They therefore offer daily car hire excess insurance to their customers. You are not under any obligation to buy this cover from them though and you may find if you do so, you have not only paid too much but also missed out on some additional features which may be included at no extra cost in the products on offer from some alternative providers.

These additional features may include things like;

• cover for excluded items;
• replacement of lost or damaged keys;
• compensation if you have to cut your rental short due to illness etc

Taking some time to understand what daily car hire excess insurance is, why you may need it and where best to buy it, may be time well spent.