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Driving around Europe is a great way to experience the continent. Renting cars in Europe can be tricky, however, as different countries have different rules.

Most rental car basic rates include liability insurance for damage to things or people outside the car, as well as to the actual vehicle. This is also known as collision damage waiver (CDW) or loss damage waiver (LDW). However, if the rental car gets damaged or stolen while it is with you — even if it is not your fault — the car hire company will charge you a certain amount for the damage or loss. With a CDW/LDW, the company puts a limit on how much excess it will charge you in case of damage to the car. The amount is reduced but you may still end up having to pay an excess amounting to EUR 1,000–3,000, or even more.

To protect yourself from having to pay an exorbitant amount — which can leave a bitter taste after an extraordinary vacation — you usually have three choices:

Buy an excess waiver protection from the rental car company to reduce how much you have to pay to zero.
Use the coverage that comes with your credit card
Buy car hire excess insurance from a third-party seller

Some companies include CDW/LDW in their basic rates, so when comparing Europe rental car insurance quotes, find out what coverage is included in the baseline rate. This will help you make a fair comparison and determine if you need to buy additional insurance.

Note that in Italy and Ireland, you have to buy CDW or LDW from car rental companies. Credit card coverage and third-party insurance are not allowed.

Coverage from Car Rental Companies

This is the most convenient option, but also the most expensive, costing around $15–$30/day. In addition, the waiver does not include damages to some parts — such as tires, side mirrors, windows, windshield, undercarriage, roof, and interior.

To bring down the excess to zero, you will have to upgrade to the rental firm’s CDW/LDW and purchase “super CDW,” which costs an additional $10–$30/day. This additional cost may double the cost of you car rental (!!!)

Credit Card Coverage

Many credit card companies already cover car hire excess insurance, so if you pay for your rental vehicle using the right credit card, you don’t have to pay excess in case the car gets damaged or stolen.

Different credit card issuers have different policies, so check first if your card does include such coverage and ask about the following:

The countries covered
The types of vehicles covered
What car parts are excluded (if any)
If loss or theft of the vehicle is covered
The number of rental days covered
The maximum amount that can be reimbursed
The number of drivers covered

For a smoother experience, print out your credit card’s car rental coverage details (in the destination country’s language, if possible) and take it with you when you pick up the vehicle from the rental agency. Most European credit cards don’t include collision insurance, so rental car agents in Europe may not be familiar with it or may push you to buy their insurance nonetheless. Being able to present a document detailing your credit card coverage will come in handy.

To make sure that the coverage remains intact, check that you are listed as the driver and use the credit card with the coverage for all activities and expenses related to the rental car — from booking to pick-up to drop-off of the vehicle. Also, make sure not to accept the waivers offered by the rental firm, including the ones that are included in the base rate. Failing to do any of these will invalidate your credit card coverage.

Another important thing to know when using your credit card for Europe rental car insurance is that the rental firm may put a hold on your card. This may be a problem if you have a low credit limit and need to purchase other things during your trip, so it is advisable to bring two credit cards. Also, if the available credit on your card is not enough to cover the value of the rental car, you may be required to purchase the rental company’s Super CDW anyway.

In addition, in case of damage or theft of the vehicle, the rental agency will charge your card and it will be up to you to get reimbursement from the credit card company after your trip. To file for reimbursement, you need to present a police report and an accident report from the rental firm, then wait for the credit card company to finish processing your claim. Note, however, that many credit card companies file a claim with the client’s personal insurance company before reimbursing the excess, which may affect the client’s personal driving records and insurance premiums.

As you can see, dealing with credit card coverage is more complicated than just buying insurance from rental car companies. It is up to you to decide if the potential hassle is acceptable compared to buying the rental agency’s more expensive insurance policy.

Third-Party Insurance

Another option to have zero-excess coverage is to get your car hire excess insurance from a third-party seller. Not only will this cost you a fraction of what rental companies charge, the coverage may be more comprehensive. You can buy a policy for a single trip or for a longer period, such as a year. Just be sure to confirm with the insurer that all the countries you’re visiting are covered.

When using your third-party car hire excess waiver insurance for Europe rental car insurance the rental firm may put a hold on your card, in the same manner that we described above.

In addition, in case of damage or theft of the vehicle, the rental agency will charge your card and it will be up to you to get reimbursement from the third party insurer after your trip. To file for reimbursement, you need to present a police report and an accident report from the rental firm, then wait for the credit card company to finish processing your claim.

One of the major benefits of third party car rental excess waiver insurance, other than the fact that it is 70% cheaper than the Super CDW offered by the rental firms is the fact that these policies cover damages to some parts — such as tires, side mirrors, windows, windshield, undercarriage, roof, and interior, which are not covered by the rental firms.

Bottom Line

Having sufficient rental car insurance when you’re in Europe is a must for a stress-free trip. You can choose to buy insurance at the rental counter if you prefer convenience. For a more budget-friendly solution, you can just use your credit card benefits. For the best of both worlds, you can purchase a third-party excess waiver insurance policy before your trip.