By Gil Farkash
Car renting while traveling has many advantages. You are not tied to the transport schedule. You are traveling in a relaxed mode and can follow independently developed routes and see more interesting places. With the right approach, this travel option can significantly reduce travel costs.
Today, it is quite simple to organize it – a car can be booked in any country in the world via smartphone in just a few clicks. You will receive the car right at the airport upon arrival. But do not forget to buy rental car insurance.
Types of Rental Car Insurance
If you rent a car in Europe, the rental price already includes Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) options. These types of insurance reduce the total cost of the loss to the amount of deductible where possible.
CDW covers the cost of damage to the vehicle or its parts and accessories. In many countries, windshields, tires, lock replacement, key replacement, and towing are not covered by the insurance policy. There can be other exceptions that vary by the rental company. It is recommended to check such details with the car rental company at the time of the car receipt.
LDW reduces the liability of the lessee in case of theft or damage caused by theft or attempted theft of the vehicle to the full value of the car. Negligence related to the theft of a vehicle can lead to the fact that the car rental company has the right to claim the full amount of the cost of the vehicle.
With the above two options, you are not completely secure anyway. In case of an accident, both CDW and LDW will force you to pay the excess, that is, a part of the amount you are claiming for.
Deductible or excess is the most important car rental point. It is the amount specified in the car insurance contract, limiting your liability in the event of an insured event. The car rental deductible determines the amount of damage that you will have to reimburse yourself. For example, if the deductible is € 500, then any repairs within this amount are paid by you, and everything above is paid by the insurance company.
This excess amount is not fixed. In European countries, it varies from €500 to €2,000 and more. And to protect yourself from paying this sum, you need European car hire excess cover.
What is Car Hire Excess Insurance?
This type of insurance is optional but very important. The main point of this insurance is to cover the excess in the event the rented car is damaged or stolen. Even if, at first glance, this additional document seems costly and unnecessary, remember that the deductible starts at €500. So paying a little extra, you will avoid losing much bigger money.
Rental companies will offer you Super Collision Damage Waiver (SCDW) that will reduce your excess to zero. This option might be very expensive and may double the price of the rental. If you wish to eliminate your risk at an affordable cost, you may want to consider Annual Europe Car Hire Excess Insurance or a daily variant from a 3rd an independent 3rd party. Most insurance companies provide daily options that are valid for a period of up to 60 days at a time. But you will need to issue separate insurance for every care you hire. Annual car hire excess insurance will work for twelve months and will be considerably cheaper than daily charges. For frequent use, the latter option is more appropriate.
With car hire excess insurance, you will also receive additional benefits – cover for lost keys, towing, damage of auto glass and tires, and much more.
Note that the car hire excess policy works as reimbursement. You will still need to have enough funds on your credit card to compensate the excess to the rental company. And then, based on documents, the insurance company will compensate you for these costs.
When choosing insurance for a rented car, you should not save on it. It is best to choose an option that fully covers all costs, including complete protection in case of theft. The suggested amount of insurance must be at least one million euros.
According to statistics, most insurance problems occur due to broken glass, scratched discs, and damaged tires. Find out in advance whether the insurances cover these points. Sometimes full insurance can cost even more than the car itself. In this case, you should not take it from the rental company, but buy it from a different company.
About the Author
Gil Farkash is the CEO and Editor in Chief at Bizit.com. Gil is a lawyer by training and started his career in B. Jerusalmi & Co Law Office. He earned an LLB law degree and BA in Economics at Tel Aviv University and has an MBA, also from Tel Aviv University. Gil has more than 20 years’ experience in redesigning the financial and legal experience for innovative companies and business owners. He helps startups, solopreneurs, small businesses, women-owned businesses, family-owned businesses, and mid-size companies get the finance, legal and insurance advice they need to be successful. Gil is also responsible for writing new money guides as well as updating old ones.