Should You Buy Car Hire Excess Insurance Before You Travel?

Why This Matters

Anyone who regularly hires cars in Spain, the Canary Islands or when travelling elsewhere will probably recognise the conversation at the rental desk.

1. You have already booked your car.

1. You believe insurance is included.

Then you are offered additional cover.

• Tyres.

• Glass.

• Scratches.

• Damage.

• Excess reduction.

• Super cover.

Suddenly the inexpensive car hire doesn't feel quite so inexpensive.

The difficulty is that after a flight, perhaps standing at a busy airport desk with luggage behind you and people waiting, it can be difficult to work out exactly what you need.

Buying suitable cover before you travel means you can make that decision calmly at home rather than under pressure at the rental desk.

What Is Car Hire Excess Insurance?

Most rental cars include some basic insurance, but that insurance can come with an excess.

For example, your rental agreement might say you are responsible for the first €1,000 or €1,500 of certain types of damage.

The rental company will usually offer additional insurance to reduce or remove that financial exposure.

Alternatively, you can buy independent car hire excess insurance before travelling.

If the rental company charges you for an incident covered by your independent policy, you submit a claim to the insurer for reimbursement.

Depending upon the policy, cover may also include things sometimes excluded from standard rental insurance, such as:

tyres

wheels

windscreens

mirrors

roof

underbody

towing or recovery

lost keys

Policies vary enormously, so always check the wording rather than assuming these items are included.

Why Buy the Insurance Before You Travel?

There are several potential advantages.

It can be considerably cheaper

Rental desk insurance can add a surprisingly large amount to the overall cost of a holiday.

Independent excess insurance may cost much less, particularly if you hire cars several times a year and can buy an annual policy.

You can compare the cover properly

At home you can read the exclusions, excess limits and claims procedure.

At a rental desk you may have only a few minutes to make the decision.

You aren't relying on a sales conversation

Rental companies make money from optional extras, including additional insurance products.

That doesn't mean the cover they offer is necessarily poor or unnecessary.

It simply means it is sensible to decide what protection you want before you arrive.

The Credit Card Strategy I Recommend

There is another part of this that is often overlooked.

Even when you have bought independent excess insurance, the rental company may still want to secure its financial exposure.

That can mean placing a deposit or pre-authorisation on a credit card.

For example, they might temporarily reserve:

€1,200

against your available credit.

That money hasn't necessarily been taken from your account, but that portion of your credit limit may be unavailable until the hold is released.

This is why I like the idea of having a credit card specifically for car hire.

You don't need to use it for your everyday shopping.

You don't need to carry a balance on it.

It simply provides a separate financial buffer for rental car deposits and legitimate charges.

Why Keep the Card Separate?

Imagine your everyday credit card has a €2,000 limit.

You use it for your hotel, meals and holiday spending.

Then the rental company places a €1,200 hold against it.

Suddenly you have much less available credit than you expected.

A separate car hire card keeps that deposit away from your normal holiday spending.

It also creates a much clearer paper trail if something goes wrong.

You can easily see:

the original deposit or pre-authorisation

any final rental charge

any damage charge

refunds

insurer reimbursements

That can make sorting out a dispute or insurance claim much easier.

But Doesn't Independent Insurance Mean I Don't Need a Deposit?

Usually, no.

This is one of the biggest misunderstandings.

Your independent insurer has an agreement with you.

The car rental company generally isn't relying upon that policy.

From the rental company's point of view, you may have declined its additional cover, so it can still require the deposit specified in your rental agreement.

Some companies may offer reduced deposits when you buy their premium cover, which is one reason customers sometimes feel pressured to take it.

That doesn't automatically mean you have to.

But you do need to understand the financial consequences of declining it.

What Happens If the Rental Company Charges Your Card?

Suppose the rental company charges €400 for damage.

If you have independent excess insurance and the damage is covered, you would normally:

Pay or have the charge applied by the rental company.

Obtain the damage report and supporting paperwork.

Keep the rental agreement and invoices.

Take or retain photographs.

Submit a claim to your independent insurer.

If the claim is accepted, the insurer reimburses you according to the terms of your policy.

Do not assume the money will automatically or instantly appear back on your credit card.

Some insurers process claims quickly, but timescales and payment methods vary.

This is another reason to have enough available credit to manage the charge temporarily.