One of the most common questions that are asked in relation to car hire is about insurance coverage. Many prospective car hire customers, particularly those staying outside the UK, have difficulty understanding the amount of the coverage provided.
Car hire companies are required by law to ensure that vehicles on the road have insurance coverage for third party risk. This would cover the driver and the car rental company for the eventuality that damage is caused to other property or injury is caused to another person not connected with the car. This is normally built into the insurance cover provided by the car rental company and is not purchased separately by the customer.
The car rental company will normally, in addition, provide cover for damage to the rental car in the event of an accident. This is normally referred to as collision damage waiver.
If the customer has an accident whilst in possession of the car, the car rental company's insurance will cover the cover the customer. However there is an exception.
Car rental companies generally speaking have an insurance excess with their collision damage waiver. The excess amount can vary depending on the car rental company and the car being hired, but generally speaking the average amount is likely to be about GBP 600.00. This means in effect, if the rental car is damaged, the customer will be expected to pay the cost of the damage repair up to a maximum of the excess amount.
On arrival at the rental location, car rental staff will typically make you aware of their excess amount. You may find that you will be offered a damage waiver which reduces your liability in respect of the excess to a lower amount. The cost of this waiver can vary with the company and with the level you wish to reduce the excess to. For example you could reduce to GBP 200.00 or to zero.
If you decide not to purchase the waiver, and you are paying by credit card, the rental company will normally "authorize" for the amount of the excess and the rental cost. This means that the total amount is "frozen" on your credit card. When you return the car undamaged the excess amount is canceled on your credit card and you are charged for the excess amount.
If the card is returned damaged, a member of staff will assess the cost of the damage repair and charge your card up to the maximum amount of the excess on top of your car hire cost.
If you are paying by debit card you usually do not have a facility to "authorize" the excess amount on the card and the amount has to be deducted at time of collection and added back to the card at the end of the rental, depending on your card company, there could be a delay in that money going back on to your card.