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Car rental companies ‘ripping off’ holidaymakers

Carihuela Torremolinos Malaga Province Costa del Sol Spain Signs for cruises excursions rent a car and money exchange
Holidaymakers in Europe should check their rental car deal as there is usually a cheaper insurance policy to be found online (Hilary Morgan)

Holidaymakers are being warned to avoid getting "ripped off" by car hire companies which are charging up to 12 times more than online policies for insurance excess waivers when travelling to Europe.

Research from Which? showed that travellers could be charged up to £199 for inferior excess waivers at the car hire desk – when alternative policies are available online for as little as £16.

When travellers hire a car in Europe, they don’t need to buy any additional insurance, as basic insurance is included in the rental price. However, that insurance is subject to an ‘excess’, so if the car is damaged it can be necessary to pay a contribution towards repair costs, regardless of who is at fault.

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Data from Zest Car Rental showed common issues like a puncture could cost as much as €300 to rectify, while a replacement windscreen can cost around €750.

Read more: How to get the best holiday exchange rates

To mitigate that, there are two options – purchase a super collision damage waiver (SCDW) policy from the rental firm, which removes or reduces the excess, or buy an excess reimbursement insurance (ERI) from a third party – either directly from an insurer, or via your car hire broker – which allows the driver to claim the excess back.

The consumer body looked at the standard of cover provided by SCDWs from six of the major car hire firms operating in Malaga, Spain – Alamo, Avis, Budget, Enterprise, Europcar, Goldcar – and compared this with the level of cover offered by ERI policies both directly from insurers and from a number of car hire brokers.

On average, Which? found for a week’s cover in Malaga this summer, holidaymakers would pay £177 for a SCDW from their car hire firm, compared to £38 for an ERI from a broker, and just £23 if purchasing directly from an insurer.

Coming in at £199, Budget’s policy was the most expensive that Which? looked at – whether ERI or SCDW. Yet despite the price tag, the consumer body found the cover offered to be inferior. Damage to the underbody of the car, misfuelling, cover for lost or stolen keys, curtailment cover and cover for drop off charges – when you are unable to return the car – are all absent, while towing costs and personal belongings cover are optional extras at an additional charge. The same is true of Avis.

Budget and Avis’s SCDW policies are the joint lowest rated, with scores of 41%.

Read more: Why car and home insurance costs are rising while inflation is falling

Close behind is Goldcar, with a policy score of 44%. At £193 it is the second most expensive policy the consumer body analysed, but it doesn’t cover misfuelling, personal belongings, lost or stolen keys or curtailment. Cover for tyres, mirrors and locks is optional at an extra charge.

Many of the best ERI policies Which? looked at are available directly from insurers. These include Cover4rentals.com’s Gold policy and Worldwide Insure’s Deluxe policy, tied on 80%.

At £16, Cover4rental.com’s top-rated Gold policy is the second cheapest policy Which? checked, and is 10 times cheaper than most of the SCDW policies. It has a £10,000 overall claim limit and highlights include £1,000 misfuelling cover, £1,000 for towing costs, £750 key cover and £500 personal belongings cover.

Worldwide Insure’s Deluxe policy (£24) has a £50,000 overall claim limit, the highest of any policies the consumer champion checked. It offers £500 misfuelling cover, £500 key cover, £500 towing costs and £300 personal belonging cover.

Rory Boland, editor of Which? Travel, said: “All too often hiring a car abroad is an unnecessarily stressful experience, with travellers sometimes pressured at the rental desk into buying overpriced insurance policies that they don’t want or need.

“What our research shows is that you should never take excess insurance from your car hire firm, no matter how hard the sell. Buy an ERI either directly from an insurer or via your car hire broker. The top rated policies are a win-win – not only are they significantly cheaper than anything offered by a car hire company, but they are also more comprehensive, meaning you have peace of mind should anything go wrong.”

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