How many times have you booked a hire car, reckoned you've got a great deal, only to get to the counter and be stung with a huge insurance bill – often far higher than the cost of the car itself?
It's happened to me so often that on a recent trip I refused to use the car hire company's cover - and instead bought a far cheaper standalone policy. Did it work? Yes: and it's why I'll never buy cover from a car hire company again.
In June I rented an economy car in Jersey for six days. The car, from Europcar, cost £100 to hire. Before I travelled I bought a £25, standalone policy from icarhireinsurance.com.
At Jersey airport Europcar offered me its cover for £90. I refused, saying I had my own policy. Would it work?
After years of hiring cars with never a scrape, I nudged this car into a wall. The wing mirror was scratched and when I returned the vehicle Europcar said the bill would be £199.
I paid with a debit card – making sure I kept all the documentation – and then, back home, made a claim. The claims process isn't entirely easy. About eight documents need to be scanned and submitted to icarhire's claims handlers (effectively you're doing the filing work yourself) and in my case some had to be resubmitted. Several emails were exchanged.
About six weeks after the event I got the money. I'd saved £65 and for that had to part temporarily with £199 and send a few emails. So yes, I'm sold on stand-alone hire-car cover.
The great car hire cover rip-off
Regular car hirers will know how costly insurance sold at the rental desks can be – but here's a taster. Take, for instance, a five-day break in Tenerife, collecting from the airport. Hertz will do you an Opel Corsa in the second half of August for £84. Fantastic. But then you're at the desk collecting the keys and the attendant says: "Do you want insurance so you won't have anything to pay if the car's damaged? It's just €24 (£18) per day."
That's €120 (£96) for the six days, so more than the cost of the car.
What's the worst that could happen if you don't take it? The maximum you would pay is €900 (£721). This is the first part of a claim you must fund yourself, before the rental firm's own cover kicks in.
And so, torn between the certainty of paying £96, or the risk of having to pay the much greater £721 (even for damage that wasn't your fault), you opt for the former.
Not a great start to the holiday. But Hertz isn't the only firm – or the worst. At least it spells out the costs for customers when they book.
Other big-name firms pressure their customers to sign up for the cover when they collect the car, without having revealed the costs beforehand. Anyone booking an Avis car to collect from an overseas destination, for example, won't be shown the price of the insurance that would reduce the excess when they book – the information is withheld.
The first inkling Avis customers will have about the costs is when they pitch up at the counter. Avis told Telegraph Money: "We are aware that additional cover charges for overseas rentals are not available when booking online. We are working on a solution to address this."
Traditional, big-name car-hire firms tend to be costliest when it comes to buying cover against damage to the vehicle. The better the deal on the car, the more the insurance will inflate the total bill. In the Hertz example, above, the cover was 114pc of the price of the car.
An equivalent economy-group car from Budget, a VW Polo, at £125 for the same five days in Tenerife later this month, would cost €145 (£116) to cover – or 93pc of the price of the car. For the same five days Avis charges £161 for a VW Polo. Avis said it would charge €50 (£40) for the additional cover.
| Rental firm | Car | Cost of car hire* | Cost of firm's own cover | Cheapest standalone cover** |
|---|---|---|---|---|
| Hertz | Opel Corsa | £84 | £96 | £9.95 |
| Budget | VW Polo | £125 | £116 | £9.95 |
| Avis | VW Polo | £161 | £40 | £9.95 |
*Based on five days hire picking up and returning to Tenerife airport, August 2014. ** Source: Moneymaxim.co.uk
How to cut that cost
Specialist insurers offer stand-alone cover that will pay for damage to hire cars up to the limit of the excess. And they are cheap. On the five-day Tenerife trip mentioned above, for example, it is possible to buy stand-alone cover for less than £10. Websites such as Moneymaxim.co.uk allow you to enter your hire dates and locations, and then generate a range of quotes both for car hire and, separately, standalone insurance policies. Worldwideinsure.com would cover an economy hire car for £10.50; Carhireexcess.com for £9.95 and icarhireinsurance.com for £14.95. There is a choice of about eight providers all charging less than £20 for the period in question.
How could it be so cheap? The answer, presumably, is that most drivers are careful, resulting in few claims – and that the insurance is hugely profitable for the rental firms.
But while the cover provided by the rental firms means there will be a no-quibble, no-payment-required process if you return a damaged vehicle, the standalone insurance policy will mean you have to pay for the damage out of your own pocket then claim back later. It will also mean having to make a careful inspection of the vehicle, with the car hire firm's staff, before you take the vehicle, and keeping all paperwork which relates to the vehicle's orginal condition.
If you do damage the car, as I did, you'll need to report it and again collect an official damage report as part of the information you'll need for your subsequent claim from the standalone provider.
Some holidaymakers have reported being arm-twisted into buying the hire firm's own insurance because there are no staff available to check vehicles, for example, or for other reasons. Staff at local desks in European airports are also said to make exaggerated statements about what could go wrong if drivers don't use the car firm's own cover.
Toby Poston of the British Vehicle Rental and Leasing Association – representing car-hire firms – said: "If you use a stand–alone policy and have an accident or cause some damage, you will have to reimburse the rental company for their costs and then claim this money back from your insurer. This can take time, and will usually require a great deal of paperwork."
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