The car hire insurance sold by your rental company is a waste of money, new Which? Travel research has found.
We compared prices for a week's hire in Malaga, Spain across major car hire firms and third party providers. The most expensive insurance we found was an eye-watering £203 with Europcar. On average, we found the major car hire firms charge £147 for a week's insurance. In comparison, the top-rated independent insurance policies sold online cost just £23, on average.
Not only is insurance from your car hire firm more expensive, it also offers inferior cover. Which? insurance experts gave the top six independent providers a policy score ranging from 75% to 82%. The highest-rated car hire company's policy was a mediocre 61%.
The policies sold by major car hire companies that we looked at (from Malaga, Spain) are riddled with holes: if a stone chips your windscreen with Avis, you get a flat tyre with Alamo, or you scrape the underbody of your Enterprise rental, you'll have to pay up. But the best online providers cover you for these problems.
The top-rated independent policies also cover you if you get locked out of the car, you accidentally use the wrong type of fuel or you're forced to cut short your hire. And you're covered (usually up to £300) for any personal items that are stolen from the vehicle.
None of the car rental firms' expensive policies cover all of this.
The only disadvantage of taking out an independent policy is that any charges will still be deducted from your credit card by the hire company, so you'll then have to claim them back on your insurance.
Car hire has become very competitive, so the major rental companies compete on the headline price on various comparison sites. The price of rental has dropped as low as £1 per day in some cases, so these companies make their money from the sale of extras.
The lowest price from a car hire company that we found, for a week's insurance in Spain, was from Enterprise at £115. Avis, Alamo, Europcar, Goldcar and Hertz's policies were all pricier.
By comparison, we found that you can buy an entire year's cover from an online insurance company for as little as £42.
In Europe, car hire comes with just basic insurance included in the price. You won't have to pay the full cost of replacing a stolen or damaged vehicle, but this basic insurance is subject to an excess of up to £2,000.
To reduce this liability, most people take out an excess insurance policy. You can either buy this direct from the car hire company or from an independent insurance firm online.
If you buy it from the car hire company, it's usually called an excess waiver or a super collision damage waiver (SCDW). If you buy this, and reduce your excess to £0, then you would pay nothing in the event of a claim that was covered by this insurance.
If you buy it independently online, it's called excess reimbursement insurance (ERI). In the event of damage, the car hire company would take any repair costs from your deposit. You would then claim these back from your insurance.