Hiring a car while on holiday can give you the ultimate independence. There is no need to check bus and train timetables, and you can enjoy the freedom of the open road. But if you have an accident or the car is somehow damaged, you could pay dearly, as most car hire companies require you to pay the first several thousand dollars for any damage. Consider a few insurance questions before you book and collect your hire car.

What is the excess your rental company offers?

Generally, if you damage the car (even if it’s not your fault), your car rental company could charge you an excess or liability contribution of several thousand dollars. Sometimes, in some places, it could be unlimited. Most companies offer to reduce this excess – sometimes to nothing – but for a significant premium. This is a convenient option, especially if you have left your planning to the last minute, but it is generally the most expensive.

Does your travel insurance cover you?

The old saying goes that if you can’t afford to buy travel insurance, you can’t afford to travel. But not all travel insurance policies are created equal, and whether your car excess is covered will depend on the policy. Check your policy carefully. It may be that the cover is better than you thought, and if you top up the insurance with the rental company, you may be double insured. On the other hand, you may not be guaranteed or only for a minimal sum, even under restrictive conditions. It’s best to check with your insurer if you have any doubts.

Specific car rental excess insurance

You can buy insurance for anything these days, including a specific policy for your car rental. This can be covered for a single trip if you hire cars rarely or an annual policy for frequent rentals. Generally, these policies offer the best range for the lowest premiums, and as always, it pays to shop around.

A few things to check:

  • Are you covered for rentals in your home country, or only abroad (e.g., if you live in the UK, are you covered for any cars you rent in the UK)?
  • Is the coverage limit higher or equal to the rental company’s excess? There is not much value in a policy with a limit of $1,000 if your rental company’s excess is $5,000!
  • Is the policy worldwide or limited to a single country/region?
  • Are you covered for theft of items (such as your prized SLR camera) from the car?
  • Are you buying from a reputable insurer?

Nominate the right driver

Keep in mind that most insurance will only cover a nominated driver who was in control of the car at the time of the damage. If you share the driving, it may be a good idea to nominate all drivers on the rental policy and insurance.