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Financial wisdom/Banking

Good to know: what type of insurance do you need when renting a car abroad?

29. january 2024LHV

Driving a rental car while travelling gives you the chance to explore your destination even more. However, driving a new car in a foreign country can also generate a fair amount of stress, as accidents can happen and you may have to pay for the damage yourself. What can be done to prevent bigger troubles?

According to Alver Kivirüüt, Head of the Products Department at LHV Insurance, the most common cases in travel insurance in terms of rental cars are cases concerning the insurance deductible. ‘Many experience scratches and fender benders in car parks and on narrow streets. Damage to tyres or rims and breaking the windscreen are also common problems,’ said Kivirüüt.

While rental cars abroad already have motor third-party liability insurance, it is often necessary to pay extra for motor own damage insurance – when renting a car under normal conditions, the insurance is mostly limited to protection and has a high insurance deductible. This is why rental companies often offer comprehensive cover – this protects against accidents and theft, as well as includes cover for tyres, wheels, and window damage.

Before taking out motor own damage insurance for a rental car, it is worth making sure that it is not already included in the contract of your own vehicle. ‘Some motor own damage insurance plans already include rental car cover. This means that if a person has taken out comprehensive insurance for their own vehicle, the cover will also be extended to the rental car – so if the person goes on a trip and rents a car there, it will be covered in the same way as their personal car waiting for them at home. However, you should carefully consult your motor own damage insurance contract to determine the existence and specifics of rental car cover – with LHV motor own damage insurance, for example, it is only valid in one specific plan,’ said Kivirüüt.

In the case that the rental car requires separate motor own damage insurance after all, you should carefully review the plans offered – paying special attention to the insurance deductible and the indemnity limits to avoid a situation in the case of suffering damage where you have to bear other costs in addition to the insurance deductible. ‘When taking out motor own damage insurance abroad, it is a good idea to ask for clarification on exactly what to do in the event of an accident, so that the damage is registered correctly – this may vary from country to country,’ Kivirüüt added. However, irrespective of the country, the principle applies that the insured event must always be documented with the car rental company.

When choosing a rental car, you should primarily approach the larger companies that are common in Europe. ‘Their customer service is of high quality and they respond quickly to problems. However, you should still carefully review the car rental and insurance contracts. Be sure to take pictures of the vehicle before setting off and after you have finished your journey to avoid any disputes down the line – we have seen cases where people have had their credit card unjustifiably charged afterwards. Recording the condition of the car before and after renting it makes it easier to dispute such situations,’ said Kivirüüt.

It is also worth thinking about the travel insurance you will take out, and ensuring it includes rental car deductible insurance – this means that if the rental car is damaged due to an unexpected event, the travel insurance will cover the insurance deductible specified in the motor own damage insurance. You should also verify that the baggage cover amount included in your travel insurance is sufficient – as this covers all the personal items you take with you on your trip, and it also covers the items in the rental car. Since theft from a rental car is not an uncommon occurrence, it is a good idea to keep your personal belongings out of sight and be careful to prevent falling victim to theft.