Whether you’re taking your own car abroad or hiring a car when you get there, you legally must have insurance. But be aware that it’s easy to spend too much on unnecessary car hire cover, and the excess can be very high. Find out how to avoid the pitfalls and get a suitable deal.

Is my car insured abroad?

If you are resident in the EU, your normal vehicle insurance will automatically give you the minimum legal requirement in each country. But now the UK has left the EU, since 1 January 2021 you’ll need extra documentation to drive abroad. To drive in the EU and EEA (European Economic Area) from that date you’ll need:

• your driving licence and vehicle registration documents (V5C) if you are taking your own car
• an International Driving Permit (IDP) to drive in some EU and EEA countries – this can be bought from the Post Office for £5.50
• proof of insurance, such as ‘green card’.

A ‘green card’ is a certificate proving that you have motor insurance cover when driving abroad. You should apply for one if you plan to be driving in the EU and EEA, including in the Republic of Ireland.

To get a green card, ask your insurance provider – and check the policy covers you to drive in the countries you’re going to. But plan ahead, as it can take several weeks to come through. There might also be a small charge.

If you live in Northern Ireland

The above still applies – since January 2021, drivers in Northern Ireland now need to carry an insurance green card when driving across the border to the Republic of Ireland (as well as the rest of the EU). This is unless there’s an agreement to the contrary. 

What insurance do I need when hiring a car abroad?

Make sure you’ve got the right documents

Since January 2021, you may need an International Driving Permit (IDP) – as well as your UK driving licence – to drive in Europe. The permit you need depends on which country you are visiting and how long you’re staying. But you won’t need a green card if you’re hiring a car within the EU.

Check what’s included in the car hire

Depending on the country you’re travelling to, you might be legally obliged to have three types of basic insurance. These are they’re usually included in your car hire costs and contract to include:

• theft of the vehicle known as ‘theft protection’ or ‘vehicle theft cover’
• damage to the vehicle also known as ‘collision damage waiver’, ‘damage excess waiver’ or ‘vehicle damage cover
• injury or property damage suffered by a third party also known as ‘third party cover’ or ‘supplementary liability’.

Get to grips with credit card pre-authorisation

Car rental agreements usually include an authorisation allowing the rental company to charge your credit card for extra items. This is why you usually have to show your credit card at the desk when you pick up your hire car. The car hire company can take a payment from your card without telling you or getting your permission.

In theory, a car rental company might charge you the full ‘excess’ cover for even minor damage to the car. It's important to check the car thoroughly and record every scratch and mark. When you take it back, make sure the hire company signs and records every mark so you both agree the condition it was returned in.

Check the small print

Read all terms and conditions online before you buy. Although sometimes the full documentation is only available at the desk when you go to pick up the car. Check that you’re covered for unlimited daily mileage if you’re travelling long distances – for example, in Australia.

Check your credit card statement at the end of your travels to make sure there are no rogue charges. If there are any charges you want to dispute, report them to both the hire company and your credit card provider – who will help resolve this for you.

Watch the excess on your hire car insurance

Most car hire companies charge a very high excess – between £500 and £1,500. They might potentially end up charging you very large amounts for even small scratches.

Consider excess insurance so you don’t pay excess

You can always cover yourself by buying excess reimbursement insurance. This means you can claim your excess back – if you’re charged. This is also known as standalone car hire insurance.

It covers things not usually included in any top-up insurance, such as tyre damage or lost keys. Although you can’t normally get it for prestige vehicles or camper vans. There are two kinds of cover:

• daily policy, which starts at around £3
• annual policy from around £39 – it’s often good value for a fortnight or more.

Don’t buy ‘top-up insurance’ from the car hire firm

Your car hire company will try to sell you top-up insurance – which reduces your excess to zero. This is also known as ‘super collision damage waiver’, ‘deductible cover’ or ‘non-waiver cover’. This top-up insurance is very expensive – around £10 a day.

It tends to exclude theft, vandalism, damaged tyres, lost keys and use of wrong fuels. It can be poor value for money but it will avoid any arguments when you return the vehicle as any damage should automatically be covered by their own policy.