How to Save Money on Car Hire Insurance in 8 Steps

Car hire insurance can be a minefield. What looks like a bargain online can quickly get expensive once you add on extra cover, hidden fees and hefty deposits. Here are my best tips for saving money on car hire insurance, avoiding unnecessary extras and making sure you’re actually covered.

There’s one part of hiring a car that I really don’t enjoy. The insurance. You find what looks like an absolute bargain online, book your car, turn up at the airport feeling smug about the deal you’ve found… and suddenly you’re being asked to pay another £150 for insurance you don’t really understand.

Sound familiar?

Car hire insurance can be confusing, and it’s surprisingly easy to end up paying more than you need to. The good news is that a little preparation can save you a decent chunk of your holiday budget.

Here are my top tips for saving money on car hire insurance abroad, without leaving yourself exposed to an expensive mistake.

1. Don’t automatically buy insurance at the rental desk

This is probably the biggest money-saving tip when it comes to hiring a car abroad.

When you collect your rental car, you’ll often be offered additional insurance to reduce or remove the excess you’d have to pay if something went wrong.

The rental company might make it sound essential, particularly when they start talking about how much you could be charged for a scratch or dent.

But you don’t necessarily need to buy their extra cover.

Many rental agreements already include some level of collision damage and theft protection, although you’ll usually still be responsible for an excess.

Instead of buying the rental company’s additional insurance, you could arrange separate car hire excess insurance before you travel.

This can work out considerably cheaper, especially if you’re hiring a car for a week or more.

My money-saving tip: Compare excess insurance prices before you leave home on a site like Localrent. Don’t wait until you’re standing at the rental desk, tired from your flight and trying to remember where you’ve put your driving licence.

One important thing to remember is that standalone excess insurance usually works on a reimbursement basis. If the rental company charges you for damage, you may need to pay first and claim the money back from your insurer afterwards.

2. Understand what car hire excess insurance actually covers

Car hire insurance has a lot of confusing terminology, but the basics are relatively straightforward.

Let’s say you hire a car in Spain and the rental agreement includes a £1,200 damage excess.

If you accidentally damage the car and the repair costs are £800, you could be responsible for that £800, depending on the rental agreement.

If you’ve bought suitable standalone excess insurance, you may be able to claim that £800 back.

That’s the main reason people buy excess insurance. It protects them against potentially expensive charges without necessarily having to pay the rental company’s daily insurance rates.

However, it’s important to understand that excess insurance isn’t the same as comprehensive car insurance.

It doesn’t automatically cover every type of damage, every vehicle or every situation.

Always check the policy wording and make sure it works alongside the insurance included with your rental.

3. Check whether your credit card includes car hire insurance

Before spending anything extra, check whether you already have some protection.

Certain premium credit cards include rental vehicle insurance as a benefit, although this is less common with UK cards than some international cards.

If yours offers it, you might not need to buy a separate policy.

There are usually conditions, though.

You may need to pay for the entire rental using that particular card, and the insurance might only apply to certain countries or types of vehicle.

Some policies also require you to decline specific insurance products offered by the rental company.

My money-saving tip: Check the actual insurance documents rather than assuming your credit card includes cover. And don’t decline any compulsory rental insurance without confirming exactly what protection you’ll have.

Even if your card doesn’t include insurance, you might still need a credit card to collect your hire car.

Some rental companies won’t accept debit cards for the security deposit, so check this before booking.

4. See whether your travel insurance covers car hire excess

Here’s another one that’s worth checking before you spend any money.

If you already have annual travel insurance, have a look through the policy documents to see whether car hire excess protection is included.

Some policies include it as standard, while others offer it as an optional extra.

You might already have some of the protection you’re about to pay for again.

However, ordinary travel insurance doesn’t automatically cover rental car damage or excess charges, so don’t assume you’re protected.

Check the amount covered, the countries included and any exclusions.

If you travel regularly and hire cars several times a year, it’s worth comparing the cost of annual car hire excess insurance too.

Buying one annual policy could work out cheaper than arranging separate cover for every holiday.

5. Watch out for tyres, windscreens and other exclusions

One of the most frustrating things about car hire insurance is that you can pay for extra protection and still discover certain types of damage aren’t included.

Depending on the policy, exclusions might include:

Tyres and wheels
Windscreens and other glass
Damage to the roof
Damage underneath the car
Lost or damaged keys
Incorrect fuel
Interior damage

And some of these are exactly the sorts of things that could happen when you’re driving somewhere unfamiliar.

Think about those narrow streets in Italy, mountain roads in Spain or tiny parking spaces in French villages.

It’s worth checking what your insurance actually covers rather than choosing whichever policy has the cheapest headline price. Some standalone excess insurance policies include protection for additional areas of the car, but others don’t.

The cheapest insurance isn’t necessarily the best value if it leaves you paying for something you thought was covered.

6. Photograph absolutely everything before driving away

This is one of those travel habits that takes about five minutes and could save you hundreds of pounds.

Before leaving the rental car park, get your phone out and photograph the car from every angle. And I mean EVERY angle.

Check the bumpers, doors, wheels, windscreen and mirrors. Look for scratches, dents and anything that seems slightly damaged.

Take a video walking around the car too.

Don’t forget the inside. Photograph the seats, dashboard and any obvious marks or damage.

If you find anything, make sure it’s recorded on the rental agreement before you leave.

You should also take photos when you return the car, particularly if you’re dropping it off outside office hours.

My money-saving tip: Photograph the fuel gauge and mileage at collection and return as well. That way, you’ve got evidence if there’s ever a disagreement about fuel charges or how far you’ve driven.

Keep the photos until you’ve received your final invoice and the deposit has been released.

7. Compare the total cost, not just the car hire price

It’s easy to get excited when you find a rental car advertised for £8 a day. But is it actually £8 a day?

By the time you’ve added insurance, an extra driver, child seats, airport fees and anything else you need, that bargain might not look quite so impressive.

When comparing car hire companies, I always think it’s better to look at the total price rather than the advertised daily rate.

Here’s a hypothetical example of how quickly costs can add up.

Car hire expense	Example cost
Seven-day car rental	£70
Extra insurance at £20 per day	£140
Additional driver	£45
Child seat	£60
Total	£315

That £70 bargain has suddenly turned into a £315 expense.

Now imagine you’d arranged suitable standalone excess insurance in advance and avoided some of those extras.

You could potentially save a significant amount.

Of course, prices vary by destination, rental company and the cover you choose, but that’s exactly why comparing the full cost matters.

8. Know what happens if you need to make a claim

Nobody wants to think about accidents or damage while they’re planning a holiday, but knowing what to do beforehand makes everything easier.

If something happens to your rental car, contact the rental company as soon as possible and follow the reporting requirements in your agreement.

Take photographs, keep copies of any paperwork and make sure you understand what you’re being charged for.

If you’ve purchased separate excess insurance, you’ll normally need to submit a claim to that insurer.

You may be asked for documents such as the rental agreement, damage report, repair invoice and proof of payment.

Some policies have strict reporting deadlines, so it’s worth checking these before travelling.

And remember, excess insurance doesn’t mean you can ignore the rental company’s rules. Driving on prohibited roads, allowing an unauthorised driver behind the wheel or breaching other rental conditions could invalidate your protection.

Is car hire excess insurance worth it?

For me, the most important thing is understanding the financial risk before you pick up the keys.

If your rental agreement has a £1,500 excess, would you be comfortable potentially having to pay that amount if something went wrong?

If the answer is no, excess protection is worth considering.

But that doesn’t mean you need to buy the most expensive insurance offered at the airport.

Compare standalone policies, check what protection you already have and make sure you understand the exclusions.

Remember that a separate excess policy may still require you to have enough available credit for the rental company’s deposit and to pay any charges upfront before claiming reimbursement.

It’s about finding the right balance between saving money and protecting yourself.

My car hire insurance checklist

Before you collect your next rental car, here’s a quick checklist to work through.

Check what insurance is already included in the rental price.
Find out how much the excess is.
Compare standalone excess insurance before travelling.
Check your credit card and travel insurance benefits.
Read the exclusions, particularly for tyres, glass and underbody damage.
Confirm the security deposit and payment card requirements.
Photograph the car inside and out at collection.
Make sure existing damage is recorded.
Keep all your rental paperwork.
Take photographs when returning the car.