Understanding Portugal Car Rental Insurance
We rework this article published in 2016 on our old site for its importance. A lot of people are confused or do not understand well the functioning of insurance in rent a car, here is the information to clarify all doubts.
There is much confusion about the insurance that apply when renting a car in Portugal or in the Algarve. You probably been faced with different explanations about the insurance that apply when you rent a car in Faro or elsewhere in Portugal.
Despite the explanations provided on our terms and conditions page and also the FAQ's pages, many customers have doubts and often question us about the coverage that the accident insurance provides and in what cases the insurance can be claimed. Truth be said, many questions persist because, in most cases, not even the very representatives of the car hire companies can give a full explanation on the matter to their clients.
So, next time you book your Faro car hire you are fully informed about the insurance the cars have and about the options you have to feel safe while driving the car you rented.
Apart from not understanding what exactly the Accident Insurance is, especially there is great confusion between Full Insurance and the Security Deposit. On this topic we will talk in another article to not add to the confusion, in this article we’ll just talk about Accident Insurance, the Excess and the Excess Waiver.
Before we get specifically in the explanation, we would like to make just a reflection:
The auto insurance you have for the car you rent when going on holiday or business to a different location, is identical to your own car insurance.
You can insure your car against others or against your own risks. Should the car be insured against own risks, there is an excess to be paid in case of accident.
Rental cars have exactly the same type of insurance. If you think in these terms it may be easier to understand how does it work the insurance on your rental car the next time you rent a car for your holiday in the Algarve or Portugal.
What are the basic insurance for rental cars in Portugal?
All the cars for rent in Portugal, and specifically in our company have two basic insurance: The insurance against third parties (Third Party Insurance) and own damage insurance (Collision Damage).
These two insurances are included in the price of the car you rent.
As their names let easily guess, the third party insurance covers car damage on the car you eventualy hit and own damage insurance covers damage to your car (the one that you rented and are driving).
Before we go deeper, just a parenthesis here to mention that you only have to worry about these issues if you have an accident and if you are guilty of this accident.
If you are the cause of an accident, while driver of a rental car, have to bear in mind the following:
– Damage caused to the car you hit are covered by third party insurance, included in the price of the car, you have nothing else to pay.
– The damage to the car you drive, that belongs to a car hire company that rented it for you, will have to be paid by you. The maximum amount payable is the amount of the excess.
But you can cancel or waive the excess at the time of making the reservation or at the time of collecting your rental car – In that case you do not have anything more to pay in case of accident, no matter the extension of damage the car has suffered.
But beware: This is accident insurance. We are talking about accident situations on the road while driving your car rental. We are not talking of negligent driving conditions where the car is damaged in a condition other than road accident.
Let us clarify the meaning of the terms you will find and which relate to insurance when you book a Faro car hire.
What is CDW?
CDW or Collision Damage Waiver insurance is the own damage – Insurance that pays the damage to the car you drive.
What is the Excess?
The Excess is the maximum amount payable to the rent a car company so that the insurance company can cover the damage caused in the car you were driving when you had the accident.
What is the Excess Waiver or Super CDW?
The Excess Waiver is the amount you can choose to pay at the time you rent the car. This value exists in the form of a small daily amount payable to be added to the rental price of your car.
Other current designations for this option are: Excess Buy Out or Super CDW or Full Insurance.
Some examples of the values you can expect to pay when you rent a car, irrespective of other extras you will need at the time you rent a car and that are clearly shown in the booking form:
1 – You rent a car of the group C, for example for a week. This car has a weekly rental price of 100.00 Euros.
You opt for the basic insurance and decide not to pay the Super CDW.
If you have an accident and it’s your fault, you will have to pay the damage to the vehicle up to a maximum which is the value of excess.
2 – You rent the same car for the same period, but in this case, you decide to stay safe and not have any surprises with extra costs that may even harm your holiday and opt for the elimination of the excess, ie, buy the Super CDW or Excess Buy Out.
If you have an accident, even if the fault is yours, you have nothing to pay in respect of damage to the rental car you were driving.
Some examples of values for Excess and Excess Waiver (*):
For groups A, B, C and D, the current value for Excess is 950,00 Euro. The Excess Waiver or Super CDW is 7.00 Euros per day.
For groups E, F, F1 and G, the current value for Excess is 1,500.00 Euros. The Excess Waiver or Super CDW is 10.00 Euros per day.
(*) These are the current values that can change at any time depending on the amounts charged by the insurance companies. Anyway this information is always updated in our Terms & Conditions page.
So, when you rent a car you can choose one of two options: Or you risk not buying the Super CDW and if you have an accident you will have to pay the excess, or you prefer to be safe and buy the Super CDW that exempts you of the deductible and in case of an accident you don't have to pay anything.
In a practical example of renting an economy car for a week it may be the difference between paying 49 Euros (7 Euros x 7 days) or having to pay 950 Euros.
There is one more mystification that is very widespread and that must be cleared: Contrary to what some rent a car agents convey to customers in their pages, the amount paid to waive the excess (Super CDW or Excess Buy Out) is not returned to the client if he/she returns the car undamaged.
The purchase price for the Super CDW is an insurance, is the amount you pay to be safe and cover any accidents that may happen. It is a value that is paid to minimizing the actual amount you would have to pay if there was no insurance.
Just as your insurance company do not return you the value of the fire insurance of your home just because your home fortunately din’t suffered any fire.
We hope this article has served to clarify your doubts regarding the coverage of your accident insurance for car rental in Algarve and that we could make some clarification about a lot of misinformation circulating about this subject.
Anyway, please note the following: Regardless of whether you have purchased the Super CDW and thus have your car rented with Full Insurance, if you have an accident you have to call the police and report the accident. It is your responsibility to bring the police report (Auto de Ocurrência, in portuguese). Without this document the insurance company has no means to confirm that you are not the responsible and you will have to pay the damages.
Anyway, and if in doubt, you can always get full information in our website at Portugal-Cars.com and send us an email stating your questions that will always be answered or else seek clarification from our representatives when collection your car hire at Faro airport.