Our most recent road trip saw us hire a car in Cancun. We were wary about driving in Mexico, but ultimately wanted the freedom to get around without being stuck on a tour bus.
And while the trip itself went smoothly, picking up the car hire almost took longer than the flight did.
Despite the ridiculous wait, I didn’t plan on complaining; the Hertz girl was copping an earful already. The guy in front of us was trying to return his vehicle, and wasn’t thrilled that his credit card was being charged $5,000 for, what he argued, was minimal damage.
He had taken out car hire insurance, but didn’t have an excess waiver, and had a really shitty deductible.
After having listened to an hour of his yelling, we finally got the keys to our own vehicle, and, drove out of the lot having learnt a very valuable lesson.
The Importance of Car Hire Excess Waiver Insurance
What Is Car Hire Excess Waiver Insurance?
When you rent a car, you’re usually liable for a very high deductible, sometimes equal to the entire value of the car. This means that if anything happens to the car, you pay up to the value of your deductible, and the rental company covers the rest.
For instance, if you have $300 worth of damage and a $600 deductible, you will pay for all of the repairs. If you have $3,000 worth of damage and the same deductible, you will only have to pay $600 toward the repair.
Whether you call it a ‘deductible’ or an ‘excess’, it means the same thing. And this is where excess insurance kicks in. It exists to reimburse you for the deductible you pay to the rental car company if anything happens to the vehicle whilst in your care.
While regular car hire insurance means you pay a limited amount, having excess waiver insurance on top of this means, in the event of damage or theft, you pay nothing.
What is Collision Damage Waiver Then?
When you hire a car, cover called Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) insurance is usually included in the price of the rental.
To be honest, this isn’t really an insurance, the rental company is simply ‘waiving’ (giving up) its right to charge the renter for the full cost of certain types of damage.
This means that you pay them up front to have a more friendly deductible. Without CDW, you’re likely to be liable for the full value of the car. However with CDW you can reduce your liability.
It’s basically an agreement between you and the rental agency that if anything happens, you’ll cover up to a certain amount, and the rental company will cover the rest. The more you’re willing to pay them up front, the lower your deductible may be.
Collision Damage Waiver does not cover every part of the car. Car rental companies typically exclude any damage to the windows, lights, engine, gears, tyres, interior and undercarriage of the car. If (for example) you hit something and damaged your mirror or undercarriage, you would pay the full cost of repairs, not just the excess.
Theft Protection is also a waiver and again there will be an excess/deductible. If the car is stolen you will pay only the excess, not the full cost of the car.
How to Cover the Excess
It’s up to you to decide how to cover the risk of having to pay your deductible, and you have three main options.
➤ Buy an “excess waiver” or “full protection” through the car-rental company.
➤ Buy an independent car hire excess insurance policy online in advance.
➤ Get “excess waiver insurance” as part of a larger travel-insurance policy.
1. Excess Waiver From the Car-Rental Company
Verdict: Easiest Choice, but Overpriced
The simplest and easiest solution is to buy excess waiver (sometimes referred to as ‘Super CDW’) supplement from the car-rental company.
The car-rental company waives its right to collect the deductible from you in the event the car is damaged. This supplement covers most of the car if you’re in a collision, but usually excludes the undercarriage, roof, tires, windshield, windows, interior, and side mirrors.
Buying excess waiver from the rental company typically costs $15–30 a day and may almost double the price of the rental. So, this is the easiest choice, but it’s also the most expensive.
Given these costs, the alternatives to paying for the rental company’s excess waiver are worth considering.
2. Independent Car Hire Excess Insurance
Verdict: Far Cheaper, and Much Better Value for Money
Car hire excess waiver insurance coverage is available from third-party agencies at a far lower cost than the amounts rental companies charge.
While car rental companies typically exclude any damage to the windows, lights, tyres, and undercarriage of the car, independent car hire excess insurance usually cover this kind of damage, so an independent policy with this included is better value.
Instead of buying Super CDW for more than $150 a week, you can usually buy a third-party policy online for less than $4.50 per day. This means that you will have to pay your deductible to the car hire company up front, but your third party insurance will then reimburse you the cost.
For instance, friends purchased a car excess waiver through CarInsuRent.com, and were charged $676 after they returned the rented vehicle with raccoon inflicted damage to the car – $641 for the repairs and a $35 “administrative charge”.
After they returned home, they submitted a claims form, scanned all the relevant documents, and emailed it back to CarInsuRent. In less than two weeks, they received $676 to their PayPal account covering the $641 repair charge in full as well as the administration fee.
When you rent from a big online car hire comparison site such Rentalcars.com or Expedia, the agency typically offers its own excess waiver protection option for around $10 per day.
3. Excess Waiver Coverage via Travel-Insurance
Verdict: Could Be a Cheap Add-on
If you’re already purchasing a travel-insurance policy for your trip, adding collision coverage is usually an option. Or if you have a travel insurance policy included when you use a certain credit card, it’s worth checking if excess insurance is part of this.
Similar to independent policies, travel insurance policies also work on a reimbursement basis, meaning you’ll at least need to have the cash available to pay a deductible up front.
That said, it’s always worth checking the terms and conditions of your policy, as travel insurance companies might only have basic options for car hire, and not step in to reimburse damage to the rental car’s windscreen, auto glass, tyres, undercarriage or roof.
If you find that the travel insurance you’re already buying covers car hire excess, or has this as an optional add-on, this could be a cheap way of adding it into something you’re already paying for. Or, if it’s already covered by your credit card company, you may not have to buy excess insurance at all.
Keep in mind with credit cards policies, that you usually have to book your trip on your credit card to be eligible for the insurance. If you book your car hire with a different credit card, you won’t be able to claim the insurance policy of another.
Do You NEED to Buy Car Excess Insurance?
Ultimately, whether you buy car hire excess insurance is up to you. However, when options through third party providers are as cheap as $4.50, that’s money well spent for peace of mind at the end of the day.
Because car damage can be expensive. Especially if you end up having to fork out for the whole value of the car.
Keep in mind that no excess waiver will help you if the car is damaged while the driver is not named as a driver on the rental agreement, or if you’ve broken the law (ie driving dangerously, speeding, or driving drunk).
Your excess waiver also won’t help if you’re caught to have breached your rental contract, for instance, car hire in USA usually states that you’re not allowed to drive into Mexico. Many car hires also disallow you from driving on an un-tarmacked road.
In any of these cases, the car hire company would charge the renter the full cost of repairing or replacing the car and you will not be able to claim refund from your travel insurance provider or from the independent car hire excess insurance.
The bottom line is that I highly recommend that you take out excess waiver coverage when you hire a car. Especially when you’re driving on foreign roads, with foreign road rules, it may be one of the best things that can protect you.
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