Holiday hint: Avoid car-hire damage fees with annual policy

The cost of hiring a car on holidays can quickly spiral out of control, but companies close to home have started responding to price gouging overseas in ways which could give Irish consumers peace of mind, while saving them a fortune.

If a car is returned to an overseas depot with even the slightest scrape, people can face bills of more than €1,000 unless they have excess insurance which can add up to €400 onto a policy, the AA has warned.

This summer, the European Commission and consumer groups across the continent have been expressing concern at inexplicably high repair bills holiday makers are being hit with by car hire companies for minor repairs.

According to reports from the UK this week, some companies are even incentivising staff to invent damage reports to penalise unsuspecting customers.

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The European Consumer Centre in Dublin has said the car-rental sector continues to drive a large number of complaints with charges imposed after the return of the car for alleged damages representing the majority of consumer concerns.

According to recent research carried out by AA Ireland involving 7,000 motorists and published on Monday, one in three holidayamkers will hire a car while abroad this year with just over 10 per cent saying they had previously paid for damage that they disputed or had been pressured to pay for damage by the car provider.

Car-hire companies operate like low-fare airlines, with top-line prices looking good with bottom lines enhanced through the sale of last minute add-ons to people who are frequently stressed-out, confused and tired after long flights.

It is in such a climate that excess insurance policies are often sold and the prices across the car hire sector have climbed dramatically in recent years as competition has forced prices of car hire down.

Typically, the cost of car rental includes insurance cover for major incidents but consumers have to pick up the tab for minor ones. Depending on the car-hire company and the contract in place, a holiday maker could be liable to pay the first €500 of damage done to a car or as much as €2,000.

But excess insurance can cost almost €30 per day which, in some instances, can be more than the actual car hire, and the high price means that less than 40 per cent of Irish holiday makers polled by the AA said they had paid for it when hiring a car in the past.

"While many of us ignore excess insurance because we're trying to save money where we can when it comes to our holiday, going without it can leave you at the mercy of car hire companies who may over-charge you for insurance or pressure you to pay for damage you never caused to the vehicle," Conor Faughnan, Director of Consumer Affairs at the AA said.

Instead of buying collision damage waiver insurance in an airport, motorists can take out an annual policy at home that offers full cover with an Irish insurance company. The AA has recently entered the market in the Republic and people taking out travel insurance with the company can add cover on to their policy at a fraction of the cost it could charge overseas.

AIG also offers a similar policy and a reader sent us story this week highlighting the difference it can make.

"I have an excess car hire insurance protection policy with AIG," the mail from Noel Gallivan started. "Recently, in Croatia, I was correctly charged €401 for damage to a hired car. I contacted AIG on July 11th and was asked to submit various proofs by email, which I did that day.

Missing was a description by the car hire company of the actual damage. AIG took it on themselves to get this from the rental location. I was told on July 13th that €401 would be transferred to my bank account in three to five working days. It was.”