All too often consumers are confused by the terminology used by car rental operators relating to “Insurance Waivers”. Terms such as ‘Collision Damage Waiver’ (CDW) and ‘Theft Waiver’ (TW) are commonplace on car rental sites and those of car hire comparison sites. But what does it all mean?
Most, but not all car hire companies, brokers and agents include CDW and TW as part of their rental price. Those that don’t include these policies are typically organisations that advertise an unbelievably low daily rental price to lure unsuspecting consumers, with a view to escalating the price during the booking process. Is this legal? Yes, but whether it is morally right, highly questionable!
However, even those rental companies that offer Collision Damage Waiver and Theft Waiver as ‘standard’ have a sting in the tail. All of these policies have a mandatory excess. And the amount of the excess is not always made clear. In fact, many consumers believe that the term ‘waiver’ used to describe standard inclusive insurance products means that there is no liability. This is simply not so. Don’t be surprised to see mention of 3, 4 or even 5 different types of “insurance” in the terms and conditions of your car rental contract.
Of course, we are all familiar with an insurance excess, on our own car insurance policies, household policies and even mobile phone insurance. The difference is the level of the insurance excess imposed by the rental operators. This invariably equates to a minimum of £750 and often much higher, perhaps as much as £2000. In a competitive marketplace, insurance companies have started to pass on some of the burden of risk to their customers in order that they can reduce the premiums they pay to their own insurers.
In turn, forever looking out for the interests of the hirer, the rental operators will offer consumers an insurance product often referred to as Car Hire Excess Insurance, Car Hire Excess Waiver or Super Collision damage Waiver, or some such name designed to offer comfort! The rental operators will argue that they separate these options because some consumers are prepared to accept the risk of an excess in return for a lower rental cost. Perhaps so, but how many holidaymakers would be prepared to accept a “risk” of £750 or more?
The problem with the insurance excess waivers is the cost, especially for those that only opt to take it out at the rental counter. Instead of the insurance excess waiver being used as a ‘comfort insurance’ for the hirer, it has increasingly become an important income stream for the rental company. In fact, those rental operators that offer the cheap headline prices invariably rely on the sale of the insurance excess policy to provide all of their profit margin on the rental. So, expect a hard sell if you haven’t taken out this type of insurance during the booking process.
Think of all the major retailers that used to sell electronic products at low prices. No self-respecting salesman would allow you to leave the store without taking out an extended warranty. This often amounted to between 35% and 60% of the product you were purchasing. The same principle applies to many rental companies, except, and this is not unusual, the addition of the various insurance policies can double or triple the headline price of the rental.
The problem with renting a car is that it is an occasional purchase, as such; few people understand the confusing terminology and even fewer, the risks or burden they are potentially taking on. Even if the hirer has taken out most of the insurance policies offered by the rental operator, they can still find themselves held responsible for the costs of damage to tyres, windows, the underside and the roof of the hire car, even if this is done through third party vandalism.
Knowing and understanding the terminology, risks and available options is an important part of the process renting a car. It is possible, for example to benefit from a low car rental price, without shouldering the burden of a huge insurance excess or accepting other exclusions.
The first advice is to ensure that the rental company offers as a minimum, Collision Damage Waiver and Theft waiver. Most do, but some don’t and this can depend on local laws as well as rental company policy. Nonetheless, it is essential that the consumer always ensures these policies are included to avoid substantial risk.
The important thing for hirers to be aware of is the fact that Car Hire Excess Insurance is optional, yes; consumers are likely to be subjected to a sustained sales pitch, which will likely include a few scare stories to add to the mix of fear. But the bottom line is you can refuse.
Instead, it is now possible to buy Car Hire Excess Waiver Insurance from a specialist, third party insurer, such as the one provided by Car Hire Assistant, in association with Odyssey Insurance. These policies are typically a “pay and claim”. In other words, you pay the excess, and then submit the claim to the insurer. This can often be done online. These policies are considerably cheaper than the waiver insurance offered by rental companies. In some cases, it is possible to take out independent cover for 2 weeks, for the same price as a rental company may charge for 2 days!
Be aware, that some rental companies may tell you that your ‘independent insurance excess waiver’ is not valid for their rental car. This is utter rubbish. Provided you adhere to the terms of the insurance cover and that it is valid for the area you are travelling to (North America, Europe, World-wide etc), then these ‘pay and claim’ policies allow you recover your excess.
Another benefit of taking out an independent excess waiver insurance policy is that they typically, but not always, include cover for damage to the tyres, windows, roof and undercarriage of the car, as well as covering the excess in respect of damage and theft. Policy terms will vary, but in most cases, the excess cover amounts to £2000 per claim.
In the same way that no two rental contracts will be the identical, the same rule applies to policies offered by car hire excess insurance policy providers. However, these insurers realise the importance of being upfront, therefore inclusions and exclusions are generally made clear in the headlines, albeit reading the full terms and conditions is essential.
Whilst most car rentals will proceed without incident, “Murphy’s Law” can become a factor, especially if you are in an unfamiliar country.
The bottom line is you can play the rental companies at their own game. Take out the essential insurance cover such as CDW and TW, and then insure your excess through an independent company. This way you can benefit from a relatively low rental price without burdening the risk of a high excess. Most major car rental operators, brokers and agents will include CDW and TW, but make sure that this is so, if the day rate looks too cheap, it probably doesn’t include these policies. Car Hire Assistant, The Car Rental Comparison Site, offers inclusive rentals with CDW and TW as standard. They also offers an option to purchase car excess waiver insurance during the booking process, or a less expensive independent pay and claim policy.