When talking about car hire insurances, things get messy. We offer you this comprehensive, practical guide so you can finally get it.
First thing you should know is that car hires do not have insurances as do private cars, but coverage, and conditions may differ from what you are used to.
Coverage and cover conditions depend on the car hire company, even if they go under the same name. Covers and conditions must be specified on the hiring contract.
Franchise is the maximum amount of money you will have to pay in case your car hire is damaged for whatever reason: damage, accident, theft...
To get a rough idea, the amount of the franchise -which must be specified in the terms and conditions - can cost anything from a few hundred to a few thousand euros. And some car hire companies could block that amount in your credit card when signing the hiring contract.
After returning the car, the car hire company will check the vehicle. Provided the vehicle is returned in the same state as hired, you won't have to pay any surcharges. In case of damages, you will waive liability for the corresponding amount of the franchise, and nothing else. Unless it is demonstrated you were driving in a negligent way. In such a case, coverage and franchise won't cover the damages, and you will have to assume all expenses.
The same will apply if the money has been blocked in your credit card. If no problems arise, your money will be unblocked and the deposit will be fully refunded. Depending on the company, this can take up to a month, a reasonable period of time the car hire companies wait in case some fine or damage may arrive. Keep in mind that as long as the money is blocked, the car hire company will not be able to use it, nor will you.
What if I don't want the car hire company to block my money? You should know that car hire companies apply two different retentions, that might look the same, but actually they are not. One the one hand, there is the franchise, that comes with the coverage, and on the other hand there is the deposit.
You already know what a franchise is. In order to avoid the franchise, you can buy a "coverage without franchise". It is more expensive, but the coverage will cover all damages, and no money will be blocked in your credit card. On the other hand, a deposit is the amount of money that car hire companies require to cover charges that may occur during the hiring, such as fuel or fines. And it is up to each company to ask for it.
So, Is it worth to pay the franchise? How does it work? Let's illustrate it with a real case. You want to hire a car -small category- for three days in Alicante. The "Comprehensive Coverage with franchise" option costs around €70, with a €267 franchise. The "Comprehensive Coverage without franchise" option costs around €90. To save money, you choose to buy the option "with franchise". If you have no problems at all, let's cross your fingers, you save €20. Now, let's say you crash into a tree, causing damages for a total amount of €250. Then you will have to pay €250 for the repair. In this case, you save €20, and you end up paying €250. It is up to you to decide whether it is worth to pay.
But you can base your decision on your sinistrality: if you have more than one claim a year in your private car insurance, then the franchise is unprofitable for you. Remember that statistics say that your accident risks increase with a hire car.
Who is who at Car Hire Insurances
Third Party and Civil Liability Insurance, TPL
TPL, or "Third-Party Liability". All car hires are covered by law by the civil liability and obligatory third party liability insurances.
And it is included in the priceof the hire, always, in all companies. It covers driver's liability for the damage to a third party belongings, but not to the car hire. It also includes damages caused by the driver to third parties, inside or outside the car hire.
By signing the car hiring contract you accept these insurances.
Collision Damage Waiver, CDW
The Collision Damage Waiver is an optional coverage that reduces financial liability for the damage to the car hire. Most companies -but not all! - include this coverage in the car hiring price, besides the obligatory insurances afore mentioned.
It is associated to a franchise and, in case of accident or damage to the car hire, you will only have financial liability for the amount of the franchise. Usually, CDW does not take liability for damages to wheels, tires, glasses, locks, broken or lost keys or remote controls, upholstery, clutch, towing charges, or damages caused for a wrong refuelling. But keep in mind that every company defines what is and what is not covered. Read the terms and conditions of the contract.
Super Collision Damage Waiver, with or without franchise
SCDW or Super Collision Damage Waiver, or the name the company just made up. It is just like CDW, but with vitamins. Like a comprehensive insurance. It may be associated to a franchise or not.
It does cover damages to things not included in the CDW, such as glasses and tires. As usual, you should read your terms and conditions to check what is included in the coverage.
Remember: if you buy a SCDW without franchise, you will have no liability on the damages to the car. If the car hire company allows you to do so, buying this coverage will allow you to pay by debit card. And the opposite is also true, if you want to pay by debit card, you could be asked to buy this coverage.
Theft protection, TP
TP or Theft Protection, is a coverage that reduces your liability in case of theft or attempted theft.
In most cases this coverage does not hold full liability of the value of the car, and it may be associated to a franchise. So, in case of theft or attempted theft of the car hire, the franchise will be the maximum amount of money you will be liable for. Besides, Theft Protection does not cover personal belongings. However, many travel, home or credit card insurances could cover these contingencies.
Please be careful, in case of negligent driving the car hire company could waive all liability for the car hire value on you.
Personal Accident Insurance, PAI
The PAI, or Personal Accident Insurance, or Passenger Insurance. It is an additional coverage that covers you and passengers in the event of death or permanent disability. This is usually not covered by other insurances. This coverage can also cover theft of personal effects if inside the luggage compartment.
Some travel, home or credit card insurances, could take liability of these problems.
Roadside assistance, RSN
This additional coverage includes road assistance, but is not liable for the damage or failure. Useful if you happen to have a car malfunction.
What to we recommend?
First and foremost, remember that all companies must include, by law, the civil liability and obligatory third party liability insurances. Most companies, but not all, will also include a CDW. Better than nothing.
In our opinion, the best option is to buy a comprehensive coverage. Why? Because no matter how an excellent driver you can be, you are hiring a car you do not know. Volumes are different, and so is manoeuvrability and car's reaction. What is more, you will be driving in unknown roads, which adds a kind of uncertainty factor that will turn your driving not so safe.
OK, you convinced me. I will buy a comprehensive coverage but, with or without a franchise? If you are not clear about the differences, read this article again... To us, the best option is a coverage without franchise. You may pay more money at the beginning, but let's think of it as an investment.
Did you made your mind up? So here comes our last, but not least, piece of advice:
Remember that all coverages and franchises will not be valid if you cause the damage intentionally or as a result of a negligence (e.g. if you drive in a prohibited or temerarious way) or if under the influence of drugs or alcohol... And you will have to pay the full amount of the damages!