RAC claims the rental car excess insurance exists in the market, but it believes throwing its name behind the product will increase the take-up

One of RAC's recovery vehicles (Credit: RAC)

The RAC has launched a new insurance product that covers the excess charge levied by rental firms in the event a vehicle is damaged.

Its new policy will reimburse the excess paid to rental firms up to a total of £6,000 ($7,270), giving drivers an alternative to what RAC claims are expensive excess waiver policies sold by the companies themselves.

Excess coverage for car hire already exists in the UK, but the roadside assistance firm believes the majority of people renting vehicles aren’t aware of it.

RAC head of insurance Marcus Latchford said: “We need to make more people aware that very affordable UK alternatives exist so it becomes second nature to take out a policy before travelling.

rac excess insurance
Customers have to fork out for rental car damage without an excess insurance policy

“This is why we decided to enter the market, as we believe a hire car excess policy with the RAC’s name on it will give people some much-needed peace of mind when renting vehicles.

“As the RAC aims to provide drivers with everything they need for their motoring lives, at home and abroad, having a straightforward insurance policy that removes some of the stress from hiring a car is a great addition to our broad range of insurance and motoring services products.”


RAC’s underwriting partner

The new policy will be underwritten by Halo Insurance Services, a subsidiary of Swiss multi-line cover provider Zurich Insurance Group, which specialises in car hire insurance.

Ernesto Suarez, founder and chief executive of Halo Insurance Services, said: “The chance to work in partnership with the RAC to grow and develop this product is truly exciting.

“While we undoubtedly have one of the strongest products in the market, we know that by joining forces with RAC, the opportunity to make so many more people aware of the product and drive uptake is massive.

“Having a name that is so trusted among UK drivers will inevitably instil confidence to purchase based on the knowledge that customers will be better protecting themselves against a costly experience in the event of a hire car mishap.”


RAC claims car hire users are often pressured to buy expensive excess cover

According to RAC, customers often feel obliged to give rental firms their credit card details in case of an accident, so the excess fee can be taken automatically.

The firm also claims some rental companies make customers feel pressurised to make an on-the-spot decision to buy their own excess insurance, despite these products rarely including cover for damage to vulnerable areas of the vehicle, such as tyres, windscreens and the vehicle roof.

rac excess insurance
Many excess insurance policies exclude damage to windscreens and roofs

“Taking out the car hire company’s excess insurance policy is usually very costly, which leads to many travellers just taking the chance that nothing bad will happen to their hire vehicle, and the excess will not be charged to their card,” says Latchford.

“By far the best course of action is to take out specialist insurance to cover the excess amount and any additional damage repair costs that might be incurred via a specialist policy bought in the UK.

“The trouble is that not enough people realise this is an option, so they end up losing out financially by buying expensive hire car excess insurance policies, often with a lower level of cover, or worse, still having to pay the excess.”