Budget car rental insurance traps

carrentalWhen going abroad and renting a car we are all looking for a good deal. There are many sites listing all cars at a given location by price and availability and quite a few well established car rental companies like Hertz, Avis etc. However low price car rental listing can come with an insurance trap.

All car rental companies list prices with the minimal state required insurance where you have to pay the excess of 1000$ plus. If you do not insure the car at the car rental company, you must present a credit card (or even two) with sufficient limit to cover the excess.

For more information about different types of insurance and insurance terminology go to wikipedia article on Car rental.

There are two solutions to this problem:

1) Take extra excess insurance at the car rental company

Car rental companies usually try to lower the basic price as much as possible. Then they use tricks to get more money at the counter and hide extra costs deep into the "terms and conditions" document. So you quickly find yourself buying additional services for something you thought was included in the price.

This is why excess waiver insurance is usually quite expensive when you take it at the car rental company. It can be as high as the price of car rental itself. They are lowering the profit margin at car renting and raising it at the insurance. At the same in some parts of the world this insurance does not even cover theft excess (Sicily etc.).

Good sides of this are:

  • no credit card with high limit needed
  • no extra money is taken from you if an accident happens and no extra paper work is needed with the third party insurance / car rental company

Bad sides:

  •  you pay more than you need to

2) Insure the car with third-party insurance

This will lower your rental costs because third-party insurance is cheaper. But at the same time it will also cause some complications.

You should lookup the excess for theft protection and collision damage in the terms and conditions and have sufficient limit on your credit card to cover it. Check also if two credit cards are needed! If you do not have sufficient limit on your credit card, car rental company will charge you their own insurance despite having a third-party insurance. Third party insurance works as a refund. So you first pay the excess to the renting company and then after the paperwork is done, they refund you the same amount. Also read thoroughly  third-party terms and conditions on what you need to do in case of damage / theft of the car. Most likely they will require police accident report, repair bill or something else.

Good sides of this are:

  • you get a better price

Bad sides:

  • you need a high enough credit card limit (check how much in rental terms and conditions or contact the car rental company itself)
  • in case of damage / theft of the car you have to cover the costs yourself and later get refunded from the third-party insurance
  • you take risk that third-party insurer might not want to refund the money

Tips and more

Always read terms and conditions! The car rental companies are masters of hiding things into their terms and conditions. The article on moneysavingexpert.com gives more extended list of things you should pay attention to when renting a car.

Below is a list of car rental brokers which provide excess insurance and have received high reviews

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