Hire cars are becoming more popular among UK drivers. They are less expensive to run and you don’t have to worry about unforeseen maintenance charges or lose out from the depreciation of your car. 

Car rental also gives you more freedom and flexibility when you go abroad - especially if you plan to escape into nature and stay in a remote area where there is limited access to public transport.

However, not all car rental companies have a good reputation when customers are involved in an accident in one of their vehicles. There are risks you should be aware of when hiring for a rental car.

If you have an accident in a hire car, or the car is stolen, you are obliged to call the car rental company to organise proceedings in the aftermath. 

A car rental company will handle recovery, repairs and, if necessary, replace the stolen or damaged hire car.

The rental company will also deal with the insurance companies and determine who has to pay for damages and how much the costs will be. 

In this guide, we explain the types of car hire insurance, what they cover, how much they cost and what you need to do to ensure you are not left out of pocket.

Car Hire Abroad

Hiring a car when you go on holiday gives you more freedom to explore the region or the country in your own time. 

Car hire companies all over the world typically include a basic package consisting of Collision Damage Waiver (CDW), Theft Protection (TP) and Third-Party Liability (TPL) cover - also called supplementary liability insurance (SLI).

The level of cover and car insurance requirements vary by country and company. If you plan to hire a car during your trip overseas, look into the typical cost of insurance for the country you are visiting. 

“The full insurance will cover your damages in case of an accident, but you’re still responsible for damages up to a deductible amount depending on your selected vehicle. That deductible varies from €500 up to €1000 depending on the car model.” ~ Eurocars

You will find that some car hire insurance policies in foreign countries include supplementary liability insurance (SLI) which will cover things like medical costs and repairs to damage caused to third party property.

However, SLI offered as part of a car rental agreement is typically the minimum amount required by law. We will discuss SLI in more depth later in this article.

What Is Collision Damage Waiver? 

Collision damage waiver (CDW) is not an obligation but it is a good option. It covers the cost of repairing bodywork if the car is damaged in an accident. CDW often includes a cover if the car is stolen.

When you purchase CDW, the car hire company essentially agrees to pay for extensive damage caused to the car.

The benefit of CDW is clear. The question you should ask yourself is whether paying for CDW offered by the car rental firms is the best option. 

Smarter Travel has this to say about car rental insurance: 

“Car rental companies desperately want you to buy their collision damage waiver, or CDW (sometimes also known as loss damage waiver, or LDW), and will go to great lengths to make you pay for even the smallest damages if you don’t.”

It’s worth noting that CDW through a car hire firm comes with an ‘excess’ clause. The amount of excess can range from between £500 to £3000. Moreover, any excess payments are taken directly out of the deposit.

CDW terms and conditions vary by car rental company. Read the terms before committing to a contract. However, in all cases, excess insurance means you will be responsible for paying the minimum amount stated in the contract. 

For example, if the excess insurance is £500, you will pay for repairs up to £500. Without CDW, you would ordinarily pay more than the excess.

CDW is not expensive and no other type of insurance is as comprehensive or as convenient. However, that doesn’t always mean that you will get the best deal for CDW through the car hire firm.

What Costs Do Car Hire Companies Charge After an Accident? 

The cost consequences of not purchasing CDW could be far worse if you have an accident. Car rental companies are known to overcharge for minor dents and scratches. 

The reason for additional cost is because car hire firms charge you for more than the cost of repairs. They also charge for:

Loss Of Use - you will be charged for the number of days the car is not available to hire. Car rental companies are permitted to charge for loss of potential revenue whilst ever the car is “out of service”.  

Breakdown Fees - if the hire car has to be removed from the road by a tow truck, you will be charged for the cost of transporting the vehicle back to the nearest office of the car rental company. 

Loss Of Resale Value - some car rental firms will argue their vehicle has “diminished value” because of the damage you caused. 

Administrative Fees - car hire firms will charge you for the time it takes to fill out various forms and speak with relevant parties for the transportation and reparation of the vehicle together with the insurance company. 

CDW typically means you will avoid having to pay for the costs mentioned above. However, even with CDW in place, you may still be liable to pay the excess for the cost of repairing the car. 

This means you can still get ripped off, the good news is, you can take out car hire excess insurance to cover your out-of-pocket losses.

What Is Car Hire Excess Insurance?

Car hire excess insurance is optional insurance that covers you for the excess you would ordinarily be liable to pay in the event of an accident in a hire car.

We’ve previously written an article about why buying excess insurance from a car hire company is not the best option. You will be able to find better deals by shopping around before you agree to a car rental contract.

The Money Advice Service also confirm it’s better to look for car hire excess insurance before you drive away in a car. 

Buying excess insurance in advance not only means you are not overcharged for damage caused to the hire car but also means you avoid having to pay the deposit with a credit card or debit card. 

Skyscanner warns travellers against paying for a hire car abroad with a debit card as this will incur an authorisation amount together with other incremental charges added by the rental company.

If you do have an accident in a hire car after paying the deposit on your credit card, your money is not returned and you are left with a credit card bill to pay that you may not have the money for.

As a result, you incur additional costs due to interest - and potentially late payment.

What Is Supplemental Liability Insurance?

Some car rental agreements also offer third-party liability known as supplemental liability insurance (SLI). This type of insurance covers the cost of any medical expenses incurred due to injury and damage caused to the property of a third party.

However, SLI offered by car hire firms only covers the minimum amount required by law. If you are in an accident in which another person is seriously injured, you could be liable to pay extensively high medical fees.

A typical SLI clause with a car hire firm reads:

“SLI is a special optional service offered by Budget when you rent a car from Budget. It’s an "Excess Automobile Liability Insurance Policy" that provides additional liability insurance, within specified limits, above the limits provided in the Agreement. SLI insures you, and authorized operators as defined in the Agreement against claims made by third parties against you, the customer, for bodily injury/death and property damage caused by the use or operation of a Budget rental car as permitted in the Agreement.” ~ Budget car rental, United States.

In most cases, the “specified limits” required by law can be as low as $3000. The injuries sustained in serious car accidents can run up a medical bill that costs tens of thousands. 

To ensure you haven't left footing extensive medical costs, the best option is to take out supplemental liability insurance with an independent insurer. SLI with Bettersafe for example covers you for up to $1,000,000 for third party bodily damage and damage to material property.

Buy Car Hire Insurance

Buying the appropriate insurance cover when you hire a car is just as important as taking out insurance when you buy a car of your own. 

If one thing is clear from various accounts, the insurance cover offered by car rental companies probably won’t provide you with sufficient cover if you are involved in an accident in a hire car.

Bettersafe car hires excess insurance ensures you are covered within the UK or if you rent a car overseas. It’s better to be safe than sorry, and with Bettersafe car hire excess insurance, you won’t be left with a financial burden that impacts your quality of life. 

For more information, contact one of our friendly team to discuss how our car hire excess insurance policies will cover you if you are involved in an accident in a hire car.