Insurance 101 : Car Insurance While Travelling

I decided to write this entry after I read about misconceptions with regards to car insurance in a travel forum. This is not the first time I bumped into either confusion or misconceptions among forum members with regards to how rental car insurance works. Many make wrong decision because they are confused with it.

So I just thought of writing a simple write up on this. But I hope I can write it as simple and as layman as possible (I know am technical sometime). 

When you want to hire a car in some foreign countries, one thing they will ask is whether you want to buy premium insurance to cover you and the car for the duration of the rent. Yes, they normally charge by day, and it makes your rental cost higher. But, don't ever take the risk by not buying the insurance because you will never know what will happen. What happen if you have an accident? What happen if you accidentally knock down a passerby and he dies? Who wants to bear the repair cost of the car? Who wants to pay the compensation to the next of kin of the dead passerby when they sue you? Never, ever rent a car without an insurance coverage. 

But then, when you decide to buy, which package do you want to buy? You sometimes see something like this for example :

Standard Insurance cover : $0 per day (Excess $4,000)
Silver Insurance cover : $25 per day (Excess $1,000)
Platinum Insurance cover : $60 per day (Excess $0)

So, of all the three type of covers, which one should you choose? What does it mean by "excess"? Excess is the maximum loss incurred (in case of accident etc) which the insurance company will not cover. For example, if you have an accident, and the repair cost is $3,000, and you bought the insurance cover with $4,000 excess, then the insurance company will not pay for the repair cost at all. If you buy an insurance cover with excess $1,000, you will have to pay the first $1,000 while the insurance company will cover the next $2,000. If you buy an insurance cover with excess $0, then you don't have to pay anything. Insurance company will cover all the cost.

Easy right? So always opt for 0 excess cover. No hassle. Of course the premium is much higher, but you can drive with peace of mind. Jangan kata boleh hati-hati memandu so tak payah beli insurance. Don't forget, kalau kita hati-hati, orang lain belum tentu hati-hati. So always make sure you are covered!

The excess, many car rental company will take a deposit upfront if you don't buy 0 excess insurance. Normally using credit card imprint as a security in case anything happens. It is an expensive business right? So have peace in mind, just buy 0 excess cover so you don't have to incur a lot upfront!