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Do You Need Insurance for Rental Cars?

Renting a car at home or abroad can be a daunting task, filled with large documents and small print that all seem confusing. Rental insurance, just like car insurance, is designed to try and make you spend more than you need. It’s therefore essential to compare car insurance policies and know exactly what you’re looking for when doing so. This guide will take you through the basics of rental and excess insurance while giving you a few tips when researching the best deals.

In this guide:

How does car hire work?

When hiring a car, all rental companies should provide you with some basic insurance. Usually, it is called CDW or LDW. CDW is short for Collision Damage Waiver, while LDW is short for Loss Damage Waiver. Both of these types of insurance essentially mean the same thing and only cover you for damage to certain parts of the car that you have rented. Therefore, you must check the policy beforehand. This type of insurance typically includes basic things such as theft, damage, and Third Party Liability. Third Party Liability is when you damage or injure something or someone else and is not usually covered when you rent a car in the United States or Canada.

What is car hire excess insurance?

Even though they provide you with basic cover, this is often subject to an ‘excess’. This means that you have to pay a contribution towards the repair of the vehicle, no matter who is at fault. This can be as high as £2,000, so it is essential to understand what you are liable for before you take out a policy. The critical thing with excess insurance is that it will the most vulnerable parts of the vehicle not otherwise covered. This includes tyres, windscreens, the undercarriage, and the car roof.

Do I need car hire excess insurance?

As with most types of insurance, you don’t have to get it if you don’t want to. But with car hire excess insurance, you can pay a small fee to avoid paying a larger one. Often, with the basic insurance provided, you won’t be covered for things such as broken windscreens or tyres, which can easily be damaged. Commonly referred to as ‘Excess Reimbursement Insurance’ or ERI, it can be done through a third party or the rental hire company themselves.

One issue you should look at is how you pay for your insurance. Often, rental companies will ask you to pay by credit card, because they are then sure they can get their money should you have an accident. If you must pay by debit card, they will most likely require you to take out excess insurance with them, which could end up costing you much more.

What types of policy are available?

There are many different policies you can get with different levels of cover. Some of the key , are:

  • Collision Damage Waiver - protects you if the bodywork gets damaged.
  • Theft Protection - you won’t have to pay for a new car should yours get stolen.
  • Third Party Liability - if you hurt or damage anything or anyone whilst you are driving.

How do I find the best deal on my car rental and car insurance?

Renting a vehicle, and the car insurance that comes with it, is like any other purchase - the more research you do the better. There are a few key tips when it comes to renting that you should bear in mind:

  • Avoid renting at the airport: When renting directly at the airport, they know that they are your only option, and are often encouraged to put on as many extra fees as possible
  • Search the internet: do not take the initial price you have been quoted as the final one. There are always coupons and codes available online that can make it cheaper.
  • Prepaid rental: Although much cheaper, they are inflexible and will not allow you to change if your plans change so you could lose out on money if you pay too early
  • Credit Card: Most credit cards will have prepaid travel insurance that covers you already, so always check with your credit card company.

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