Dear Alex,
Last December, I rented a car from Thrifty (Australia) at Adelaide airport. Before leaving the UK, I had taken out a 60-day worldwide excess policy through insurance4carhire.com. Included in this firm’s helpful tips was to “decline the car rental company’s excess at the counter”.
Unfortunately, a week into the trip I reversed my Thrifty hire car into another parked vehicle. It caused AU$150 [£98] of damage to the Thrifty vehicle but more severe damage of AU$1,500 [£975] to the other car.
Thrifty promptly charged my credit card with AU$1,900 [£1,235] including taxes. Believing I was fully insured, I had no quibble with that at the time. But I now find the UK insurance firm will pay only for the damage to the Thrifty vehicle, which means I am more than £1,100 out of pocket.
Insurance4carhire says that all car hire firms have Compulsory Third Party (CTP) insurance so I should not have had to pay Thrifty for the other vehicle’s damage. But Thrifty maintains that its CTP insurance applies only to personal injury, not vehicle damage. What should I have done to avoid this situation?
Leslie More, Peebles, Scotland
Alex replies:
Leslie More’s experience is a cautionary one for readers and should act as an alert to the pitfalls of hiring a car overseas when taking out “excess waiver” policies issued by third party insurers.
Car rental excess – the amount for which you are liable should your vehicle be damaged in any way – has become a nice little earner for rental firms worldwide. Its cost has risen over the years, and it can be unwise for the customer to decline it. Use Thrifty’s outlet at Edinburgh airport, for example, and you face excess varying between £500 and £1,000 depending on vehicle type. To waive this excess, hirers must take out “Super CDW [collision damage waiver] Protection” costing £13 or £18 a day.
In Australia, the excess liability for renters is far greater, which reflects, perhaps, the country’s vastness and its tougher driving conditions outside urban areas. Thrifty customers who damage their vehicle are liable to be billed up to AU$3,300 (£2,146) even if driving a modest family car unless “Ultimate Protection” costing AU$33 (£21) a day is taken out.
As a result, customers planning to hire for days or weeks at a time are tempted to sign up for the excess packages marketed by third-party companies such as insurance4carhire. It has policies offering 31 days’ European excess cover for £49, with worldwide priced at £65.
But the problem is twofold. From the rental firm’s point of view, the various insurances have become an important revenue stream akin to roaming fees for mobile phone operators or ancillary charges for budget airlines. Staff dislike customers turning up with pre-purchased insurance because they lose out on commissions to augment their salaries, and it means hire firms and their staff can make life difficult.
To avoid problems, a spokesperson for insurance4carhire advises that customers “thoroughly read through the terms and conditions before signing the rental agreement no matter how tired they are or how long the queue”.
And that is another problem. International car rental is complex and variable. How can the average customer master the myriad rules and regulations imposed both by local law and the firm itself? After a long trip, who has the time or energy to read through pages of legalese? All you want to do is collect your keys and be on your way. So if taking out an excess policy, be aware of the potential pitfalls. Otherwise, pay at the desk for peace of mind.
