Car rental insurance and excess explained

Third-party liability and damage to the vehicle

Liability cover pays for damage you cause to other people or their property. It is compulsory in order to drive and does not protect the car you are driving. Damage protection for the vehicle is a separate layer and concerns the rented car.

When an offer advertises “insurance included”, it usually means that second layer exists, but with an excess payable by you. They are two different things, and it is worth working out which one each line of the terms describes.

The excess is your share of the damage

The excess is the maximum amount that stays with you in the event of damage. Below that threshold you pay the repair; above it, the cover steps in. The higher the excess, the more risk you retain and the cheaper the offer normally looks.

As an illustration: with a hypothetical excess of £900, a knock repaired for £300 is entirely yours, while damage of £2,500 would cost you £900 with the remainder covered. A cheap offer with a high excess is therefore not always the cheapest in the end.

Theft and damage are separate covers

Protection against theft usually appears as a cover in its own right, with its own excess and its own obligations. It generally requires the incident to be reported to the police and the keys and vehicle documents to be handed over.

It is worth checking whether the theft excess matches the damage excess or differs from it. In some terms these are separate figures, and the distinction shows only in the detailed contract wording.

The exclusions you meet most often

Many damage covers leave specific parts out: tyres, glass, headlights, the underside of the car, the roof, the interior and the keys. Those are precisely the parts that suffer on narrow roads, in tight car parks and on unsurfaced tracks.

Damage from filling the wrong fuel, from driving off permitted roads, or from letting someone not named on the contract drive is also commonly excluded. Read that list before deciding whether extra protection is worth it.

Reducing the excess: at the counter or separately

A reduction bought from the company acts directly on the contract: if damage occurs, less is claimed from you, or nothing at all. It is convenient, but usually the most expensive route, and it is offered at the counter with little time to read it.

A standalone policy bought separately works differently: the company still charges you the excess, and you then reclaim that amount from your insurer. It costs less but requires you to advance the money and to keep every document.

What to check before buying a reduction

Look at whether the reduction takes the excess to zero or merely lowers it, and whether it also covers the parts excluded by the main contract. A reduction that still leaves out glass and tyres leaves exactly the most frequent risk open.

Check as well whether it applies to theft as well as damage, whether it caps the amount per incident or per contract, and what notification deadlines it imposes. These details separate two products that look identical in the advertising.

Excess and deposit are different things

The deposit is the security held on your card at pickup. The excess is the share of any damage that stays with you if something happens. The two often coincide in amount, but they serve different purposes.

A deposit can be taken without any damage occurring, and an excess higher than the deposit held can be claimed. Both figures should be read separately in the terms.

Small damage and inspection fees

Even minor scratches and dents are often billed against a fixed tariff, and a separate item may be added for damage assessment or for the days the car cannot be hired out. Those items sit alongside the repair itself and add up quickly on damage below the excess.

If the contract refers to such a tariff, ask for the price list. Seeing in advance which damage corresponds to which amount makes a later invoice far easier to check.

If the car is damaged

Document the situation immediately: photographs of the damage and the surroundings, the time and the place. If other parties are involved or the car cannot be driven, call the company on the number in the contract and follow its instructions.

In the event of theft or a collision with another vehicle, a police report is generally required. Without that document the cover can reject the claim, even if you bought a reduction.

Compare the total cost of the risk

Comparing two offers takes more than the daily rate: add the rental price and the cost of the reduction, then set the remaining excess and the excluded parts beside them. Only then can you see which offer fares better in the worst case.

The planned comparison intends to show excess, exclusions and the cost of a reduction next to the price from the end of 2026. Until then it is worth noting those values by hand while comparing.

Checklist

• Separate third-party liability from damage protection for the vehicle
• Find the exact excess amount in the terms
• Check whether the theft excess differs from the damage excess
• Read the list of excluded parts: glass, tyres, underside, roof and keys
• Check whether a reduction removes the excess or only lowers it
• Verify whether the reduction also covers the excluded parts
• Compare the counter reduction with a standalone policy
• Keep the deposit amount distinct from the excess amount
• Ask for the fixed tariff price list for small damage
• Note the damage reporting number given in the contract
• Photograph any damage immediately with the surroundings visible
• Obtain a police report where theft or third parties are involved

Frequently asked questions