Motor Insurance Pit Falls

Most insurance customers understand the term “excess” but not everyone appreciates the implications. An excess is a form of “self-insurance” or in other words a potential cost to the customer if a claim occurs. Whatever the cost of the claim, the excess is payable for the amount agreed except where the total of the claim is less than the excess amount – in which case the excess equals the cost of the claim.

Most policies from large car rental companies such as Hertz and Europcar carry an excess of some kind and most discerning customers will attempt to choose a low excess contract since that is the whole point of taking insurance – taking away the worry of the claim cost. Each country is different in the level of protection the customer receives and part of the rental policy. For example rental policies in the USA are usually different to European rental policies. Look here for more info on this.

However, control over this issue is lost to the customer when driving any vehicle which is not owned by or leased to them. The owner of the vehicle will always wish to ensure that their property is insured and will control the insurance cover. In this situation the amount of the insurance excess is dictated by the vehicle owner.
Many customers who have small or reasonable excesses make the mistake of assuming that the excess amount will be similar when hiring or borrowing a vehicle but this is hardly ever the case. An excess of £500 tends to be the minimum these days and can be much higher.

Firstly, excesses reduce premiums and no business person is likely to pass up the chance to save costs. The higher the excess – the lower the insurance premiums. Secondly, having to bear a sizeable amount of the cost in the event of an accident assumes that the driver will drive more carefully which hopefully reflects in fewer accidents and less loss of potential hiring time. Generally, it is perceived that drivers of vehicles not owned by them take less driving care. However, driving with the burden of an excess is not compulsory due to the widely available excess insurance cover. For a fairly modest premium, excess costs can be fully covered. The customer decides the amount or “sum insured” needed and the period of time that cover should be in force. This could be just a few days or a longer period.

Buying cover before hiring a vehicle has many advantages. Firstly, you can shop around for the right cover at a competitive price. Secondly, you can assess the quality of the insurer who is offering the cover including their customer service reputation. Thirdly, you will have the time to read the conditions and warranties applicable before going ahead with the purchase.

These advantages are particularly important when hiring a vehicle abroad. So often time seems to be in short supply when you are completing the hire contract. The documentation is often written in the language of that country and, unless you are a fluent speaker, you may well be signing something without knowing all the terms. You may be hiring more than one vehicle during your visit – in which case you will be paying more than once. Click here for more info on this topic.