A Tale of Excess

On a recent family trip to the UK I learned something new about car rental insurance. During my many years of business travel, we were always told to turn down the collision damage waiver, or CDW, insurance offered by the rental company. Our personal credit card provides rental car insurance, but you must decline the CDW and reserve and pay with that card.

When we picked up our car hire just outside of Oxford we were pleased to see we’d been upgraded to a BMW 500 sedan.  We inspected the car, took pictures of the few minor blemishes, and reviewed the additional insurance options. They offered something called excess insurance, which I was unfamiliar with.  It was explained that in the event of damage we would be liable up to the value of the car. Excess insurance would cover that, but at £35 pounds per day. I declined this insurance down, thinking our credit card would cover any damages.

You can probably guess what’s coming next. Within a mile or so of leaving the office we missed a turnoff on a rotary and had to get off and head back on the highway. I made a distracted right turn on the entrance ramp in front of an oncoming VW van. The other driver did a great job of trying to miss us, and the impact was at a shallow angle at fairly low speeds. No airbags deployed and the car was still drivable. There was a significant crease, however,  on the left (passenger side) of the car from front to back.

The mental damage was greater. The car hit right where my wife was sitting. We were both pretty shaken by the incident, but managed to safely drive back to the car hire office. The staff at the office were extremely professional and caring. Their first concern was our well-being. Once he ascertained that we were OK, the office manager gingerly explained that, since we hadn’t elected the excess coverage, we were responsible for the entire value of the car. We had to purchase the BMW at £56,685 pounds!

As you can imagine this added to our state of shock. Once we understood the situation we chose to divide the amount over 3 credit cards, with the majority charged to the card that we used to make the reservation. We were told that once the repairs had been made they would refund the difference between the excess amount and the actual damages.

After that we cancelled our reservations for that evening in the Cotswolds and returned to Oxford to regroup. At the hotel I contacted our credit card company and initiated a claim. The representative I spoke to had never heard of excess insurance, but was quite helpful. I initiated the claim and followed it closely over the next 6 weeks. I had to provide documentation of the accident, the rental reservation, the final receipt, an accident report, a drawing of the accident, and credit card statements showing the charges and future refunds.

After about three weeks I received a detailed damage report listing the repair costs, fees, and a refund of £43,030.93 pounds. The refund was deposited to our credit cards within a week of receiving the letter. The insurance claim through our credit card for the remainder took a few weeks longer. They initially denied the claim because of the confusion about using multiple credit cards to pay the excess fee, and which card was used to make the reservation and pay for the rental. I had to write a detailed letter explaining the situation and appeal their decision. The case had to be reviewed by their senior appeal board. We never received notification of their decision, but 2 weeks later we received a FedEx package with a check reimbursing us for the repair costs and fees, about £13,654.07.

Clearly this process was unknown to the American insurance companies. I even to spoke to our personal car insurance broker and they were amazed. At the end of the day, we lost about $127 due to currency conversions.  We were able to manage the situation and pay off our April credit card bills on time with no interest charges. It didn’t help that we also had a sizeable tax due in April, as well as a $14,000 payment for our next trip this summer.  April was a challenging month, but we weathered the storm and came out intact.

There are some obvious lessons from this story. I didn’t properly research auto rentals in the UK. I also didn’t understand the nuances of our credit card’s auto rental insurance, especially how they interact with the rental company’s insurance and our personal auto insurance.

I’m grateful that no one was injured, and that we had the financial resources to manage this. Afterwards I wondered what would have happened had we not had the available credit to charge the full excess.  Our credit score has always been very high, but it took a 100-point hit from this. I’m not too worried and will monitor it to see if it returns to its previous level.

Sadly, the accident precluded us from completing our plan of touring the Cotswolds, and Hope Cove. We considered using trains or car services, but we elected to return to London and fly home the next day. Ironically, that coincided with the electrical substation fire that shut down Heathrow airport, so we spent a final weekend enjoying London. There is still a lot of the UK we want to see, but we’ll have to think about how we want to accomplish that.