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Car hire excess insurance is an optional policy that reimburses you for the excess, the amount you would otherwise have to pay if the hire car is damaged or stolen. For many renters it is worth considering, because the excess on a standard rental can be large and the rental desk version of cover is often more expensive. It is not right for everyone, though, and the details of each policy matter far more than the label on the box.
This guide explains what excess is, how standalone cover works, whether you need a credit card and how claiming back usually works. Policy terms, limits and exclusions differ between providers and change over time, so always read the policy wording and check the rental company terms before you buy.
What is car hire excess?
Excess is the amount you are responsible for if the hire car is damaged, or in many cases stolen, even when basic insurance is included in the price. Think of it like the excess on your own car insurance. If the car is damaged and the repair costs more than the excess, the rental company limits your liability to that amount. If it costs less, you may pay the lower figure.
Most rentals include basic cover, often called collision damage waiver and theft protection, but with an excess attached. The excess amount varies between rental companies, countries and car categories, so check it on your booking confirmation. Do not assume it is small, because it can be significant.
What the excess often does not cover
Even with included cover, many rental agreements exclude certain parts of the car, such as tyres, glass, the underside, wheels, mirrors, keys or the roof. Some exclusions also apply to interior damage. Standard rental cover may also not include charges such as towing, administration fees or loss of use. This is where people are often caught out, so read the small print before you travel.
Is car hire excess insurance worth buying?
It depends on how much risk you are comfortable with and how much the excess is. If a large excess would be a real financial problem, cover can give peace of mind. If you hire cars often, an annual policy can be cheaper than buying separate cover each time. If you rarely drive abroad and the excess is low, you might decide the extra cost is not worth it.
- Check the excess amount on your booking before comparing cover.
- Compare the cost of a policy with the cost of the rental desk cover for the same period.
- Check whether the policy covers the parts of the car that are excluded by the rental company.
- Check the territory, because some policies exclude certain countries or islands.
- Check the maximum claim limit and whether it matches the excess you need to cover.
Also consider how you drive and where. A hire car in a busy city with tight parking, or on narrow roads, carries a different risk than one used only for motorway journeys. Our car hire guide has more on comparing rental deals, fuel policies and deposits before you book.
How does standalone excess cover work?
Standalone excess insurance, sometimes called third party or independent excess cover, is bought from an insurance provider separately from the car rental company. It does not stop you being liable for the excess at the rental desk. Instead, it reimburses you after the event, usually when you have paid the excess and then claim it back.
This is the main difference from the cover sold at the desk, which usually reduces or removes the excess directly, so the rental company does not hold or charge it. Standalone cover is often cheaper, but it works on a pay first, reclaim later basis.
Single trip or annual cover
You can often choose between a policy for a single rental and an annual policy covering multiple hires. Annual cover can be good value if you take several trips a year, but check the limits on the number of days per hire and the countries covered. Single trip cover is simpler if you only hire once.
What to check in the policy
- The maximum amount it will pay per claim and per policy period.
- Whether it covers tyres, glass, wheels, underbody, roof, keys and interior.
- Whether it covers theft and what you must do after a theft.
- Whether you can add additional drivers and what that costs.
- The type of vehicle covered, since some policies exclude vans, luxury cars or specialist vehicles.
- Any age limits or driver restrictions that may apply.
If you are also buying general travel insurance, check whether it includes any car hire excess cover, since some policies offer it as an add-on. Do not assume cover exists, and do not buy duplicate cover without checking what you already have.
Do I need a credit card for car hire excess insurance?
This is a separate question from the insurance itself. Most car rental companies require a credit card in the main driver name to hold the excess deposit, and some do not accept debit cards for this. If you decline the rental company excess cover, they typically place a hold on your card for the excess amount, which reduces your available credit while the car is out.
Standalone insurance does not remove the need for the deposit, because the rental company still wants security. This catches some travellers out, so check the rental terms for accepted cards, the hold amount and when it is released. A card with a high enough limit matters if you decline the desk cover.
- Check which cards the rental company accepts and whether the card must be in the main driver name.
- Make sure you have enough available credit for the deposit hold.
- Ask when the hold is released after you return the car.
- Remember that a debit card may not be accepted at all for the deposit.
- If you buy the rental desk cover instead, the deposit is often lower or removed. Check this at booking.
Card choice can also affect fees and protections. Check with your card provider for any foreign transaction fees and whether the card gives you any rental related protections. Do not assume a card benefit exists without reading the terms.
How do I claim back excess insurance?
If the car is damaged and the rental company charges you the excess, you pay it first and then claim it back from your insurance provider. The process varies by provider, but the general steps are similar. Keep every document, since claims are decided on the evidence you can provide.
- Take photos and video of the car before you drive away, and again when you return it.
- Make sure any existing damage is recorded on the rental agreement before you leave.
- If damage happens, report it to the rental company and, if relevant, the police, and follow the policy instructions.
- Get a copy of the damage report, the repair invoice and the receipt for the excess you paid.
- Contact your insurer promptly and follow their claim process. Many have time limits for making a claim.
- Keep copies of your rental agreement, your insurance documents and all correspondence.
Claims usually take some time, so do not expect the money back straight away. If a claim is refused, ask for the reason in writing and check the policy wording. You may be able to challenge the decision through the insurer complaints process and, if needed, an independent financial ombudsman service, but check the current process for your policy.
Common reasons claims run into trouble
- The damage is to a part excluded by the policy.
- The claim is made late or without enough evidence.
- The rental company charges extra fees that the policy does not cover.
- The driver was not named on the rental agreement.
- The policy territory or vehicle type did not match the hire.
Practical tips before you book
- Compare the total cost, including excess cover, before choosing a rental company.
- Read the rental terms for fuel, mileage, deposits and cross border rules.
- Decide whether you want desk cover, standalone cover or neither, before you arrive, so you are not pressured at the counter.
- Check your own motor or travel insurance for any existing cover.
- Inspect the car carefully and photograph everything before you drive off.
If you are comparing holiday options with a hire car, our cheap holidays guide and last minute holidays guide can help you plan, and our UK holidays guide covers trips closer to home. For one example of a destination guide with car hire in mind, see our Alicante airport car hire page.
Excess insurance is an insurance product, so check that the firm selling it is authorised by the Financial Conduct Authority (FCA). You can look it up on the FCA Financial Services Register. This article is general information, not personal advice, and it does not recommend any provider.
Frequently asked questions
Is excess insurance a legal requirement?
No, it is optional. Basic cover is usually included in the rental, but you choose whether to add excess cover.
Is standalone excess insurance cheaper than the rental desk cover?
It is often cheaper, but it works differently, since you pay first and claim back later. Compare the full terms and costs for your trip.
Can I buy excess insurance after I have booked the car?
Often yes, but check the provider rules, since some require you to buy before you collect the car.
Does excess insurance cover tyres and glass?
Some policies do and some do not. Check the policy wording for the specific parts covered.
Will the rental company accept my standalone policy?
They will usually still ask for the deposit. The policy is between you and the insurer, and they may ask you to decline their cover.
What if I damage the car and cannot afford the excess upfront?
You may be asked to pay on the spot, so check that your card has enough available credit. Contact your insurer and the rental company as soon as possible.
Does travel insurance include car hire excess cover?
Sometimes it is an optional extra. Check your policy documents rather than assuming.
Car hire excess insurance can save money and stress, but only if the policy fits your trip and you understand how claiming works. Read the wording, plan for the deposit and keep good records. Check current terms with the provider before you buy.