Car rental is one of the easiest ways to discover a destination, yet getting the correct car hire insurance regularly throws up all kinds of unnecessary issues and problems.
We often hear from holidaymakers who have bought insurance they didn’t need because of pushy desk staff, or didn’t take insurance at all because they didn’t think they needed it. Sometimes, it is just a case of misunderstanding – unfortunately though, misunderstandings can be costly when it comes to car hire.
The short version? Always check the small print. To help you do this, however, here we explain some of the key insurance terms you might come across when hiring a car and what you need to do to protect yourself.
What your car hire company provides
All car hire companies should provide you with basic insurance – usually called CDW or LDW. This typically covers damage, theft and Third Party Liability Insurance – this may vary from country to county, but generally there is a level of insurance included in the price of your car hire.
That’s all well and good, but what do all these acronyms and insurance company jargon mean? Once you know, it’s not actually that complicated. However, getting your head around it can be difficult.
CDW is short for Collision Damage Waiver, while LDW is short for Loss Damage Waiver. Both offer varying levels of cover in the event of a collision or damage to the car, and for theft or loss of the vehicle – effectively, they mean the same thing: they cover you for damage to certain parts of the car or theft, but always check what is covered by the policy you are offered.
We say certain parts because often things such as the roof, the windscreen, the tyres and the undercarriage are not covered. CDW/LDW is generally included as a part of the rental in Europe, Africa and Australasia, but usually not in the US or Canada. Again, always check the small print before you drive away.
The CDW or LDW will cover the total market value of a vehicle, but you will almost certainly be expected to pay the first part of the cost, or the “excess”, although it's possible to avoid this – more about that below.
Third Party Liability Insurance – sometimes called Supplemental Liability Insurance (SLI) – covers you in case you cause damage or injury to someone else. This might not be included in your rental in the US and Canada, so make a habit of checking your policy.
You can usually find what a rental company covers you for on their website – if it’s not easy to find, contact their customer care team and ask.
So what’s the problem? Surely if you are already insured by the rental company there’s nothing to worry about? Well, not exactly. You are covered to a degree, but you are still liable to pay for damage to parts of the vehicle that aren’t covered, and the excess.
Car hire excess insurance
If you have an accident or damage your car hire vehicle, you will still pay the excess cost (this can be anything between £100 to £2,000, depending on the company you book with). Car hire excess insurance waives this fee so that you aren’t left out of pocket – you’re essentially paying a small fee to avoid a potentially huge fee.
Given that car rental companies are renowned for excessive mark-ups on even the slightest scratch, car hire excess insurance can save you a packet should you (or someone else) damage the vehicle. The way it works is that you pay the first part of the claim when you return the car and then reclaim the money through your insurer later.
Standalone third-party policies (a one off you would buy from a specialist insurer) are available from as little as £3.49 per day if booked in advance, whereas desk prices can be upwards of £20 per day.
At some companies, desk staff can earn commission on the insurance they sell – unfortunately, this can lead to fear and hard sell tactics. The main thing to remember is that no matter what the rental agent may tell you, if you have already purchased a standalone car hire excess policy, you are fully covered.
One issue to look out for, however, occurs when you try to pay for your deposit by debit card, rather than credit card. The reason car hire companies want a credit card deposit is so that your money is available to them to cover any damage not covered by the firm’s CDW/LDW insurance. If you attempt to pay by debit card (some rental companies will flat out refuse this), they will often insist that to do this and take your vehicle you must buy their own car hire excess policy to ensure they don’t end up out of pocket. And that's even if you can prove you have your own excess insurance policy.
If you want to avoid issues, always pay by credit card if possible.
Insuring other parts of the vehicle
Remember when we told you most CDW/LDW policies don’t cover the vulnerable parts of the car, such as the windscreen, the undercarriage and the roof? If you’re in a car accident, these areas are very likely to get damaged, so you will have to pay the excess cost.
To get around this, you may wish to consider a car hire excess policy that covers these areas of the car as well. For example, if you’re in an accident and the windscreen gets damaged, you would pay the excess to the car hire company and then claim it back from your insurer.
As always, check the small print of your policy before you drive away.
Find out more about car hire excess insurance and whether you need it.
What happens in the event of an accident?
How you deal with an accident can have an effect on your insurance. For example, if your rental car is damaged or stolen, some companies require you to report the incident within a specific time frame. If the police are involved, you should also make sure you get a copy of their police report.
If you fail to comply with either of these requirements then you may have trouble when it comes to making an insurance claim. With all incidents, it’s best to report it to the car hire company as soon as you can and ask the police to provide you with a written incident report at the time of the accident.
Roadside cover
No one wants to spend any part of their holiday stranded at the side of the road – especially in a country where you may not speak the language – but breakdowns do happen.
Unfortunately, you cannot assume that you are covered for breakdowns, as providers can have very different policies on this: some will include cover in the rental price, while other may ask you to pay extra for it.
If you book through a broker (Argus Car Hire or Holiday Autos, for example), you might not find out who you are actually renting the car with until you book. Once you do, check what the breakdown policy is before you travel.
If you book directly through a provider, you can find out from them directly: Avis, for example, includes basic 24-hour breakdown cover in the price of its rentals, as does Hertz.
Once again, it’s simply a case of checking beforehand so that you aren’t left in a difficult situation while on holiday.
Before you pick up the car
Check you have the right documents
In 2015, the paper counterpart to your photocard driving licence was condemned to the scrapheap by the DVLA. In its place, a shiny, new digital code was introduced to share driver information (points, penalties etc) with car hire companies – you’ll need this when you pick up your car. You can generate this 21 days before you’re set to pick up your vehicle on the DVLA’s website. However, for a belt-and-braces approach, we recommend keeping your paper counterpart and taking it with you too.
Another essential is a credit card – there aren’t many companies that will allow you to drive away without some sort of security deposit first. The deposit itself isn’t actually taken from the card, just blocked out until you return the car. The credit card will need to be in the name of the primary driver; some companies will also accept debit cards, but it’s wise to check beforehand.
When you book, you may also be given a voucher from the company which usually contains the details of your rental, so make sure you print this before you leave for the airport.
Oh, and a valid licence helps too. Nothing spoils a road trip like turning up to collect your wheels only to realise you aren’t actually legally able to drive. It can take up to three weeks to get a replacement licence, so make sure you check well in advance of your holiday.
Check the car thoroughly
By the time you pick your car up, you’re probably chomping at the bit to start your actual holiday. But wait, before you drive off into the sunset, you need to check your hire car thoroughly.
And by “check”, we don’t mean a cursory glance to make sure the car has four wheels.
Go round the car, searching for any bumps and scratches, taking photos as you go. If you have a smart phone, use it so you can time stamp the pictures – then make sure your rental company makes a note of any marks you have found. It should have a paper print out of the vehicle for this exact reason.
Check the exisitng vehicle condition report, which you should be given when you pick up the car. This will have any existing damage on the vehicle marked on it.
As well as the general body, always check the wheels too as these can be prone to damage.
“Whenever you pick up a car there will probably be scratches on the alloy wheels as a result of general wear and tear and companies can avoid marking these down on the checkout sheet as existing damage. We have seen instances where a customer is accused of damaging wheels and they have no evidence to show otherwise,” warns Ben Wooltorton.
Finally, check that the car has everything you need, such as a spare tyre and jack or any other equipment you may need to drive in your destination.
Other money-saving tips for car hire
Choose the right fuel policy
Fuel prices are rising, meaning a cost-effective fuel policy on your car hire is essential. Full-to-full or same-to-same policies are broadly considered the best value for money – they just require you to return the car with the same amount of petrol as when you picked it up.
Avoid full-to-empty policies. While they can be convenient as you don’t need to find a petrol station before you drop off the car, you’ll be pre-charged for the fuel, often at a grossly inflated price.
At TravelSupermarket, we only show you hire rentals with fair fuel policies (ie full-to-full or same-to-same) so you’ll have one less thing to think about when comparing deals.
Say no to add-ons
A sat nav can be a handy addition to any road trip, but with prices from around £15 per day, it can also be a pricey one (that’s £75 for just 5 days).
Instead, avoid the upsell and stick to using your phone. You won’t even have to fork out for roaming charges – just download the map data for your area on a free app like Navmii or Google Maps and you can see it all offline.
The same goes for children’s car seats. Many airlines, such as easyJet and Ryanair, allow you to travel with a car seat for free alongside your pram or pushchair, so contact your airline before renting one abroad. You may even find your destination has standalone equipment rental services, such as Tots Store in Malaga and The Stork Exchange in Majorca. However, be aware that you’ll probably have to install the car seat yourself.
Finally, if you're dividing up the driving, add any extra drivers at the time of your booking – it can cost more to add them at the rental desk.
Plan your drop-off
Dropping off your car hire is fairly simple. You’ll often only need to do two things: refuel the car and check again for damages.
When it comes to filling up the car, be sure to research local petrol stations before you set off. You’ll often find one right by the airport but prices can be expensive. Instead, look for petrol stations a couple miles out – you may find a better rate.
At the drop-off location itself, recheck the car with a company representative and get a copy of the signed document that says the car was in an acceptable condition. You shouldn’t be hit with any charges after this, but it pays to have a copy in case you need to dispute any fees.
Returning after hours? If there’s no representative present, make sure to take your own photos of the car as you’ve left it. On the off chance something happens before morning, you’ll have time-stamped evidence that it wasn’t your fault.
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