Is the car insurance from hire car firms really worth having?
Car-hire customers risk rip-off insurance
Thursday, 08 May 2008 15:20
Car hire insurance tends to be something people just accept as standard when they go on holiday but are consumers getting real value for money? Sarah Routledge investigates.
Arriving at your holiday destination, weary after a flight, the last thing you want to do is haggle with car hire staff over add-ons which push up the cost of your transport.
Firms may offer excess cover, personal liability cover, loss of property cover and personal injury cover in addition to the third-party cover that is included in the hire price before they hand over the keys.
But savvy consumers know that the helpful assistant offering extras at the point of sale is just trying to wring as much cash as possible by selling unnecessary insurance policies to the unwary customer – right?
Some of the policies on offer may well be unnecessary. Picking up extra insurance to cover the theft of any items left in your car, or personal injury in the case of an accident is pointless if your travel insurance already covers you. However, other products could be very useful.
Car-hire customers who neglect to take out extra insurance on their vehicles risk being hit with huge charges if their car is returned damaged, as rental companies will charge for the excess on the insurance policy.
In the US, the excess will usually be zero with insurance included in the hire price, but in Europe a scratch can cost hundreds of pounds.
In order to avoid a traumatic end to a holiday, most car-hire companies will offer additional cover to pay for the cost of the waiver. Yet this cover can vary between companies and can be very costly in itself.
For example,
Avis will, in most circumstances, include third-party, vehicle theft and vehicle damage insurance in the vehicle hire price. But if the vehicle is damaged, customers will have to pay an excess, usually around £600.
To avoid the excess, customers can take out Premier cover, at a cost of between £11 and £15 per day, depending on the size of the car. This is charged for the first seven days of rental only, but could end up costing £105 for a week.
Budget also offers insurance against excess charges, which vary depending on the country and the size of the car.
In Switzerland, a policy to bring your excess down to zero will cost approximately £21 a day, while in France the comparable charge is around £8 – but only if two other policies are taken out, which may or not be included in the basic rental price.
A spokesperson for
Budget explains: "We don't believe it's fair for careful drivers to effectively subsidise less careful ones.
"Amounts vary by country as local conditions mean there are varying risks – southern Italy for example has had a high risk of theft – in the same way that someone might have a higher excess than another on their car insurance because they’re a higher risk."
Rental protection may seem costly, but it could save a lot of money if you are in an accident, even one that is not your fault.
One solution is to buy insurance before you hire the car through an independent provider.
Larry Ursich from
insurance4carhire.com says buying an annual or short-term policy could be better value.
According to Mr Ursich, many people take insurance out over the counter that will not meet their needs. Insurance often has exclusions that mean you could still have to pay out even if you did buy extra cover.
"Typically things not covered are wing mirrors and the undercarriage which includes shock absorbers and the suspension in general. Car hire companies will give you the impression that it's just the oil sump that isn't covered," Mr Ursich says.
"Car hire insurance should be sorted out in the UK before you travel when you have the time to choose and from the comfort of you own home. You then have the opportunity to prepare," he adds.
"Our deal is £3.99 a day, this compares to Europcar who will charge £11.50 plus VAT."
An annual policy from insurance4carhire.com costs £49, which is good value for those with property abroad, according to the company. Mr Ursich says 30 per cent of his customers own property overseas.
Holidayautos.co.uk, which is owned by
Lastminute.com, also offers insurance against the cost of excess.
Managing director Stuart Nassos says: "When a car hire company gives you a car they are trusting you with a lot of expensive metal. In order to cover the insurance charges in the basic price of the car, customers are liable for the first €1000 (£804), for example.
"So if you also buy insurance cover, we will reimburse you that cost."
Mr Nassos explains that for £2.50 a day, holidayautos.co.uk will cover the entire car except for the undercarriage, wheels, roof and glass.
These exclusions are an industry standard, Mr Nassos says.
But he adds: "We have a new total damage product which costs £4.50 a day, and that will cover everything – excluding in the case of negligent driving."
Mr Nassos recommends taking out total cover: "If you look at the potential for accidents, especially in countries with tighter roads like Italy, Spain and Portugal, you definitely want full cover.
"For peace of mind, for such a small amount, it is worth it."
In order to enjoy a stress-free holiday, Mr Nassos also suggests getting digital photographs of any damage to the car before you drive off to avoid being stung for problems that were already there.
As with any financial product, it is best to think ahead and buy any insurance before you get to the airport. Otherwise, your holiday may end up costing much more than you thought.
Top tips for hassle free car rental:
ALWAYS read the terms & conditions of the car hire provider’s website & documents
Check the Excess – even if you reduce it to zero you may still be liable for damage to windows, tyres, roof and undercarriage
Check that your insurance covers all aspects of your trip – especially if you are planning off-road travel
Check the vehicle for any existing damages when you collect the car. Make notes on the car rental form and take photos
Take your car hire company’s contact details with you in case of emergencies and check if there is any breakdown cover
Check what time you need to return the car – you will be charged for any over-time
Check your credit card statements after your hire to ensure no unauthorized extras have been charged to your card