Car hire insurance typically covers damage to the vehicle (CDW), theft protection, and third-party liability. Most rentals include basic cover in the price, but you’ll often face a high excess if something goes wrong.
For frequent renters or those wanting peace of mind, standalone car hire excess insurance is usually the best-value option. This guide covers where to buy insurance from, what type of coverage to get, and what those policies cover.
In this article
- Do you need car hire insurance?
- What are the different ways to get car hire insurance?
- What insurance do car hire companies offer?
- What insurance do specialist car hire insurers offer?
- Rental-desk cover vs standalone car hire excess insurance.
- What’s the best way to get car hire insurance?
- What does basic car hire insurance cover?
- What’s included vs excluded in standard car hire insurance?
- What does excess car hire insurance cover?
- Frequently asked questions.
Do you need car hire insurance?
Yes, you need some form of car hire insurance. Third-party liability is legally required in most countries, and collision damage waiver (CDW) is strongly recommended. Here’s when different levels of cover make sense:
- Basic cover only: Your rental already includes CDW and third-party liability, you’re comfortable with a high excess (often £500–£2,000), and you’re driving in familiar conditions.
- Excess insurance recommended: You want to avoid large out-of-pocket costs if something goes wrong, you’re hiring abroad, or you’re renting multiple times a year.
- Full cover essential: You’re driving in challenging conditions (rough terrain, unfamiliar roads), hiring a high-value vehicle, or your credit card and travel insurance don’t extend to car hire.
What are the different ways to get car hire insurance?
There are several different ways to get insurance for your hire car. If you’re looking to save money, first check any existing insurance policies you have to see if they offer cover.
Check your own car insurance, personal insurance or credit card benefits. You may find one covers you already.
Care hire companies.
The car hire company you use will clearly mention in their terms and conditions which type of insurance is mandatory according to their own policy and local legislation. Most companies include basic 3rd party liability and CDW (Collision Damage Waiver) insurance in their quoted price.
Keep in mind that car hire companies tend to recommend excess coverage, and can be more expensive than other insurance methods. Determining what is necessary and what is extra, can help you choose what’s best for you.
Specialist hire car insurers.
If you hire cars very often, as I do, and are happy to plan ahead, independent car hire insurance brokers can be a budget-friendly way to find regular full cover. Many offer different insurance levels and plans to meet your needs. These can include single trip, monthly and annual policies covering the UK and rest of the world.
These kinds of policies offer what’s called car hire excess insurance. This means in case of damage to your rental you have to pay the excess to the car hire company. You can then claim this cost back from your specialist insurer.
Credit card insurance.
It’s not uncommon nowadays for credit card companies to offer insurance for hire cars as a perk. The type and level of insurance varies dramatically for different card issuers though. It’s important to know exactly what coverage your credit card offers and excludes to see how it meets your needs.
You should also be aware of any limitations in coverage based on location. I recently hired a car in the Dominican Republic only to discover my credit card didn’t extend to this region.
I ended up paying full over-the-counter insurance with the hire company and had to use it for a cracked windscreen. If I hadn’t checked my credit card and not taken extra coverage, it would have cost me around $600.
What insurance do car hire companies offer?
All car hire companies offer a basic liability insurance as standard. This means you’re legally insured to drive the car and are covered for damage to third parties and their property.
The excess insurance they sell over the counter is more like a waiver. Simply, it excuses you from having to pay if the car is damaged or stolen while you’re renting it.
Note: Getting insurance from your car rental provider generally works out more expensive.
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What insurance do specialist and third-party car hire insurers offer?
Specialist, or third-party, insurers offer the same kind of insurance as rental companies, but they have a slightly different approach. Instead of only offering excess insurance on a trip-by-trip basis, many also offer monthly or annual policies, which can be more cost-effective.
Typically, these policies include coverage for damage or injuries caused to others and reduced out-of-pocket expenses for damage to the rental vehicle. They may also offer additional benefits like roadside assistance.
It can be tempting to stick with the basic insurance and hope for the best to save a few pounds. But with all the competing excess insurance policies now available, prices are lower than you might expect – especially for annual policies.
Duncan Madden, travel writer
Comparatively, they are often cheaper than taking insurance with the rental company, but do come with a disadvantage. Should you make a claim, you’ll need to pay the rental company and get the necessary forms and receipt. You can then use these to claim your costs back from the third-party insurer.
Rental-desk cover vs standalone car hire excess insurance.
Trying to choose between buying cover at the rental desk or arranging standalone car hire excess insurance in advance? Here’s how they compare:
| Factor | Rental-desk cover | Standalone excess insurance |
|---|---|---|
| What it covers | Reduces or eliminates excess on CDW/theft; may include extras like windscreen and roadside | Reimburses excess charges you pay to the rental company. Often includes tyres, windscreen, underbody |
| When you pay | Upfront at the desk or added to your booking | You pay the excess to the rental company first, then claim it back |
| Cost | Typically £10–£25 per day | Single trip from around £3–£5 per day; annual policies from £40–£60 per year |
Which is cheaper for most travellers?
Standalone car hire excess insurance is usually better value, especially if you rent more than once a year. An annual policy can cost less than a single week of rental-desk cover. The trade-off is the claims process — you’ll need to pay the excess upfront and submit paperwork to get reimbursed.
When is an annual excess policy better value?
- If you hire a car more than twice a year, an annual car hire excess insurance policy typically costs £40–£60 and covers unlimited rentals.
- Single-trip excess policies usually cost £15–£40 per trip, so the annual option pays for itself after just one or two rentals.
- Annual policies often include wider coverage (tyres, windscreen, underbody) that single-trip options may exclude.
What’s the best way to get car hire insurance?
Getting full insurance directly from the car hire company can be expensive, especially if you buy it over the counter. If you want to find the best deal, it helps to shop around and consider your options.
It also depends on what kind of coverage you need based on where you’re driving. And then of course there’s your appetite for risk, and how happy you are driving with minimal insurance.
Car hire insurance for renting in the UK.
When hiring a car in the UK, the basic inclusive insurance policies are similar to those in Europe and the US. The main thing to note is that Liability Insurance is the only policy that‘s legally required. Collision Damage Waiver is not a legal requirement but is often included in the rental price anyway. If it isn’t, it’s a good idea to get it.
The best way to choose your car hire excess insurance in the UK is to compare a range of policies based on your specific trip. If you hire regularly, specialist excess insurance companies offer monthly and annual policies that may be more cost-effective than buying direct from the hire company.
As always, you should also check your credit card add-ons and travel insurance policy first, as these often offer some level of private hire car insurance already.
Car hire insurance for renting abroad.
When hiring a car to drive in a European country, you’ll find that some insurance policies might already be included in your contract. This is usually the case with Collision Damage Waiver, Third Party Liability and Theft Protection.
Some of these policies will include an excess. If you want to reduce it to zero, consider taking out an Excess Waiver policy. As with the UK, the best way to choose is by comparing policies from rental companies and specialist providers to see what’s most cost-effective for your trip. Make sure you read the fine print to know exactly what it covers.
If you’re planning to travel around Europe and cross borders in your hire car, it’s important to double check you have coverage in all the countries you’ll be visiting.
In the US, some states have different laws on what type of insurance they require. In all cases you should have Third Party Liability insurance, which is a requirement, and Collision Damage Waiver or Loss Damage Waiver.
Note that the latter comprises both CDW and Theft Protection.
Overview of what is included in different car rental insurance types.
Basic car hire insurance.
Basic car hire insurance typically covers three things: damage, theft, and third-party liability.
Insurance coverage tends to have a location and circumstance limitation. Make sure to check the regions where your coverage applies and any specific circumstances it doesn’t cover. For example, it may exclude certain countries or even only cover you driving in your country of residence.
It goes without saying, but insurance companies won’t cover accidents where the driver has broken any of the terms and conditions. This could be anything from driving under the influence of alcohol to taking your hire car off-road.
Collision Damage Waiver (CDW).
CDW covers damage to the hire car’s bodywork, which is most of the car’s exterior, including the bumpers, wings, doors, etc. It doesn’t include the windows, wheels, or the interior.
The most you’d have to pay in the event of damage sustained is called an excess and is usually specified in your policy. Beware though, excess rates can be very high, which is why you can also buy excess insurance.
Theft Protection (TP).
Theft Protection means you won’t have to pay for a new vehicle if someone steals or damages it when trying to steal it. As with CDW, the only thing you’d have to pay is any excess specified in the Theft Protection policy.
Loss Damage Waiver (LDW).
LDW is the collective term for both CDW and TP policies. It protects you if someone steals you hire car and for any subsequent damages or vehicle replacement.
The excess for LDW policies is usually even higher than it is for CDW policies. If you’re concerned about these excess payments (and you should be!), excess insurance is the answer.
Third Party Liability (TPL).
TPL insurance covers you for death, damage or injury to a third party in an accident you’re liable for. There’s usually a maximum amount this policy will pay out to the third party, so make sure you check your policy.
What’s included vs excluded in standard car hire insurance?
Understanding what your car hire insurance covers — and what it doesn’t — can save you from unexpected costs. Here’s a quick breakdown:
Typically included:
- Third-party liability (legally required)
- Collision Damage Waiver (CDW) — covers bodywork damage
- Theft Protection (TP) — covers vehicle theft
- Basic roadside assistance (varies by company)
Commonly excluded:
- Tyres and wheels
- Windscreen, windows, and mirrors
- Underbody and roof damage
- Interior damage
- Lost or damaged keys
- Misfuelling (wrong petrol/diesel)
- Admin fees charged by the rental company
- Personal belongings in the vehicle
Many of these exclusions can be covered by standalone car hire excess insurance or by adding specific protection at the rental desk.
What does excess car hire insurance cover?
Above are the basic types of coverage, but there are several things that additional policies would also cover. What happens if you get injured in a hire car? If your personal belongings are stolen from a hire car? If you get into an accident with someone who’s not insured themselves? There are policies that cover each of these situations too.
Car Hire Excess Insurance.
Excess insurance covers any excess charges that you might need to pay if your hire car is damaged or stolen.
This is an optional insurance, but it can save you a lot of money should the worst happen. Many car hire companies charge a lot for excess payments.
Supplemental Liability Insurance.
Supplemental Liability Insurance is an optional policy providing more extensive protection than Third Party Liability. Bear in mind this insurance may be part of your policy already, which is common in many European countries.
Not so in the US and Canada, however, so double check prior to booking if you want it.
Personal Accident Insurance (PAI).
PAI covers driver or policy holder expenses in the event of an accident. This could be ambulance transportation or similar costs that stem from medical assistance.
You can also take out a similar Personal Effects Insurance. This covers the driver’s belongings in the car in case it and they are lost, damaged or stolen.
Roadside Assistance.
Accidents happen flat tires, mechanical or electrical malfunctions, etc. Many hire companies include basic roadside assistance in the rental price, so check first.
If you want to get more comprehensive roadside assistance in case of self-inflicted problems (lost keys, wrong petrol in the tank and the like), you can usually add a deluxe version of this service.
The insurance companies, policies and prices I’ve put together for you in this article are non-exhaustive. There are other companies and policies available.
If you’re travelling to a country where driving is slightly more treacherous than in the UK, consider asking the rental company what type of additional insurance policies they recommend.
In Iceland, for example, there are terrain-specific insurance policies that to this day I’m still thankful for. Driving over rough volcanic roads took its toll on my shiny Volvo XC90 hire car when a rock got wedged between brake and wheel. Without the specialist insurance, I would have ended up paying a fortune to fix it. It was an epic road trip, though!
FAQs.
Most car hire bookings include third-party liability insurance (legally required) and Collision Damage Waiver (CDW). Some also include Theft Protection. However, these policies typically come with a high excess — the amount you’d pay out of pocket if something goes wrong.
Car hire excess insurance reimburses the excess (deductible) you’d have to pay to the rental company if your hire car is damaged or stolen. It’s a separate policy you buy from a specialist provider, and it covers the gap left by standard CDW and theft protection.
Some credit cards offer car hire insurance as a perk, but coverage varies significantly. Check your card’s terms for what’s included, what’s excluded, and whether there are geographic limitations. Many cards don’t cover tyres, windscreens, or certain countries — so always verify before relying on it.
