When looking to rent a car, rental car insurance coverage can sometimes be quite complicated to understand. The majority of car rental companies have their own policy regulations and rules. When in the process of renting a vehicle, the short time of cover required can mean that understanding the insurance policy underwriting conditions may seem like a more difficult task than usual.
The idea behind rental car insurance coverage is simple and the same as a private policy agreement. All countries have similar rules to vehicles on the road requiring a minimum level of insurance; this is usually third party liability, which means that should an accident happen, the third party of the accident is covered through the car renters insurance.
It is very important for a client of a rented vehicle to understand the full extent of what the rental car insurance coverage includes. Many rental agreements may include a higher level of coverage than the minimum third party liability that is required as a minimum. Additional insurance may be included at a higher premium which could typically cover a rented vehicle for such things as theft or damage cover. Damage cover is usually known as ‘collision damage waiver’, or CDW which protects the client against any form of damage resulting from a collision.
Obviously the higher the level of car rental insurance, the less financial risk there is to the client should an accident or loss occur. Premium prices will be reflected upon the level of cover given.
One important factor governing a rental car insurance policy is the level of excess or deductible that is liable should an accident happen. As with a standard policy, the higher excess required is relative to the price of the premium. A high excess policy will generally have a lower premium, while low excess liability will result in higher premiums.
It is also important to note of any circumstances with car rental insurance whereby insurance that may be included in the rental price of the vehicle is ‘capped’ with a low maximum level of payout from the insurer. In some cases this could mean that the amount given to the insured is at an amount lower than that required to cover loss or damage liabilities. In some countries, however, this cover can be unlimited by local governing laws. In addition some rental companies exclude damage to some particular areas of the vehicle, even with collision damage waivers. Examples of this are the windscreen, roof, tires and wheels. In the event of an accident, damage to these areas of the vehicle will have to be paid by the client on top of the cover which they receive.
If these conditions are not accepted by a client, there are a few extra options available to ensure satisfaction of cover. Firstly, most rental companies offer a high level insurance option, these are sometimes referred to as policy ‘top ups’. This will ensure that the driver is covered to a maximum level and can reduce the amount of excess and increase the liability cover to include such car parts as wheels and tyres etc. Of course this is a very expensive option and premiums for it will be high.
Secondly, although a rental company will have pre-agreed insurance for all types of vehicle and age of driver, an alternative is to use a specialist third party insurance company or broker that offer car rental insurance coverage. Most insurance companies have their own bespoke car rental insurance policies and it can pay dividends if researched prior to arranging the actual rental of a vehicle.
In addition to the financial benefits of using a specialist third party insurance company, the levels of cover can often be higher with better value than that of the rental car company’s insurance. Furthermore, third party rental insurance is often for a period of time rather than an individual rental period. This means that cover is provided over the course of the policy for any number of rented vehicles rather than just one vehicle for a single rental period. This is particularly beneficial to any client that hires vehicles on a regular basis.