Rental car excess and deposit: everything you need to know

You have found the perfect rental car online for your holiday. The price looks sharp, you fill in your details and you assume the deal is done. Then at the counter you hear that a hefty sum will be blocked on your credit card and that in the event of damage you may have to pay hundreds of euros yourself. For many travelers who rent a car abroad, that discovery comes as a surprise, and quite often as an expensive lesson.

The problem is usually not that something unfair is happening, but that the concepts of deposit, excess and the related insurance are poorly explained. In this guide we explain thoroughly how it all fits together. What the difference is between a deposit and an excess, how the block on your credit card works, which insurance terms you will come across, what is typically not covered, and which ways there are to cover your excess. That way you arrive at the counter prepared and you know what to look out for.

Deposit and excess: two different things

Many people confuse these two concepts, even though they mean something quite different.

The deposit (also called a security or bond) is an amount that the rental company temporarily reserves as security. You do not actually pay it, it is blocked on your credit card. Think of it as collateral. If you cause no damage and return the car correctly, the full amount is released again.

The excess (in English often called excess or deductible) is the amount you actually have to pay yourself if there is damage or if the car is stolen. Say there is a dent in the door and the repair costs more than your excess, then you pay up to that ceiling and the insurance covers the rest. The excess is therefore a genuine loss, the deposit in principle is not.

The deposit is usually higher than or equal to the excess, precisely so that the rental company can withhold the excess from the blocked sum in the event of damage.

How the block on your credit card works

The deposit is almost always blocked on a credit card in the name of the main driver. A debit card or prepaid card is not accepted by most international rental companies for the deposit, and certainly not for larger or more expensive vehicles. This is one of the most common reasons why people get stuck at the counter after all.

Technically it is an authorisation or pre-authorisation. The amount is not charged, but reserved, which means your spending limit temporarily drops. If you rent a roomy vehicle or an expensive category, the blocked sum can mount up considerably. So check in advance whether your credit limit is high enough, otherwise the transaction can be refused.

How long the block stays in place varies. Sometimes the amount is released within a few days, sometimes it takes several weeks, depending on your card issuer and the rental company. That is normal and no reason to panic, but it is good to keep in mind if money is tight.

The insurance terms unravelled

At the counter and in the terms and conditions, English abbreviations pop up. Here are the most important ones.

• Third party liability. This covers damage you cause to others, so to other vehicles, people or property. This cover is usually mandatory and included as standard in the rental, because without legal liability insurance a car is not allowed on the road.
• CDW (collision damage waiver). Literally a declaration that the rental company waives a large part of the costs in the event of damage to the rental car itself. Note: CDW is not full insurance, there is usually still an excess remaining.
• TP or theft protection. Limits your liability if the car is stolen, again usually with an excess.
• Super CDW or excess buy-down. An additional cover that lowers or completely removes the excess. This is the product that is often actively offered at the counter.

Important to understand: CDW and theft protection usually do not remove the excess, they only set a ceiling. Only with an excess buy-down do you move towards zero. The exact terms and amounts differ greatly per rental company, country and vehicle category, so always read your own contract.

What is typically not covered

Even with CDW and an excess buy-down, there are parts that fall outside the cover in many contracts. These are classic surprises after the fact.

• Tyres and wheels. A flat tyre or damaged wheel is often not reimbursed.
• Windows and windscreen. Stone chips or a crack regularly fall outside standard cover.
• Underbody and roof of the car. Damage from a kerb that is too high, a bollard or a low-hanging tree branch is often excluded because standard CDW only covers the bodywork during normal use.
• Keys. Losing the key or a replacement can be at your own expense.
• Wrong fuel. If you fill diesel into a petrol car or vice versa, the consequential damage and towing costs are usually not covered.
• Damage through negligence. Driving under the influence, off-road driving where it is not allowed, or leaving the car unlocked can void any cover.

These exclusions differ per provider. Some more expensive all-in packages do cover tyres and windows. If you want to know how such a complete package compares to the bare basic price, read our guide on all-inclusive or the cheapest rental car.

Buying down your excess: four ways compared

Covering your excess can be done in several ways, and where you arrange it makes a big difference in price and convenience. These are the four main routes.

The counter option is the most reassuring but usually the priciest. With separate excess insurance you buy a standalone policy that reimburses the excess. The important difference: in the event of damage the rental company simply charges the excess to your credit card, and you then claim that amount back from your external insurer. So you must be able to advance it temporarily.

Cover via your credit card sounds attractive because some premium cards offer a form of rental car cover. The reality is more erratic: it often only applies if you pay the full rental with that card, there are exclusions for certain countries and vehicle types, and the cover is secondary. Call your card issuer and request the terms in writing before you rely on it.

The claims process step by step

If you do incur damage, the right handling determines whether you see your money again. Work systematically.

1. See to safety first. Park the car safely, use your hazard lights and, if necessary, your safety vest and warning triangle.
2. Fill in the European accident statement. In a collision with another party you fill this in together. It is the same document throughout Europe and serves as the basis for any settlement. Do not sign anything you do not understand.
3. Take plenty of photos. Photograph all damage, the position of the vehicles, the number plates, the surroundings and any road signs. Visual material is your best evidence.
4. Report the damage to the rental company immediately. Most contracts oblige you to report within a certain period. Do this for single-vehicle damage too, such as a scratch on a bollard.
5. Call the police in case of theft or injury. For a theft claim a police statement is almost always required.
6. Keep all documents. You will need the completed statement, the photos, the damage report from the rental company and any police paperwork if you claim with an external insurer.

The European accident statement is one of the documents you want to have on hand in any case. In our guide on which documents you need we list everything you should bring along.

Getting your deposit back

If you return the car without damage, the blocked deposit is released again. Even so, it is wise to stay alert to this.

Preferably have the car inspected together with an employee and ask for written confirmation that everything is in order. If you drop it off outside opening hours via a key box, take extensive photos and video yourself with the date as proof of the condition in which you leave the vehicle. Also refuel according to the agreed fuel policy and keep the fuel receipt, because unjustified fuel charges are a classic point of dispute.

The block does not always disappear from your account immediately. That is normal and depends on your card issuer. If after a few weeks you still see a charge or block that is incorrect, contact the rental company and your card issuer, armed with your photos and your drop-off proof.

Concrete example scenarios

A few situations make it tangible. The exact amounts differ per contract, so we stick to the principle.

Stone chip on the motorway. You are driving calmly and a flying stone causes a crack in the windscreen. Many basic contracts do not cover window damage, so without additional cover you pay for the windscreen yourself. An all-in package or an excess insurance that includes windows absorbs this.

Small scratch while parking. You graze a bollard while reversing. The damage falls under the bodywork, so with CDW you pay up to your excess and the rest is covered. If you have bought down the excess, your cost stays limited or nil, provided it does not concern an excluded part such as the underbody.

Filled the wrong fuel. In a hurry you fill the wrong type. The engine damage and the towing usually fall outside any cover. This is purely a matter of paying attention, no insurance routinely saves you here.

If you want to avoid these kinds of costs as much as possible, our guide with 12 tips to avoid hidden costs will help you on your way.

What to look out for before you sign

Before you sign the contract, it pays to check a few things. Read how much the excess is exactly and what it applies to. Check which parts are excluded, in particular tyres, windows, roof and underbody. Ask which card is required for the deposit and how high that deposit is. And if you have taken out excess insurance in advance, bring the policy terms so you know what you can claim afterwards.

A few minutes of reading at the counter can save you a lot of hassle and money later. Feel free to ask for an explanation if something is unclear. A reliable rental company will take the time for that.

Frequently asked questions

Is a deposit the same as the excess?

No. The deposit is an amount that is temporarily blocked on your credit card as security and that you get back if nothing is wrong. The excess is the amount you actually pay yourself in the event of damage or theft. The deposit is usually higher, so that the rental company can take the excess out of it in the event of damage.

Can I reserve a rental car without a credit card?

For the deposit, most international rental companies require a credit card in the name of the main driver. A debit or prepaid card is often not accepted for the deposit. There are providers with more lenient conditions, but do not count on it and always check this in advance in the rental terms.

Does my credit card automatically cover the excess?

Sometimes, but by no means always. Certain premium cards offer a form of rental car cover, usually with strict conditions such as payment of the full rental with that card and exclusions for certain countries or vehicle types. Request the terms in writing from your card issuer before you rely on it.

What do I do in case of damage abroad?

See to safety first, fill in the European accident statement in a collision, take plenty of photos and report the damage to the rental company within the set period. In case of theft or injury, call the police. Keep all documents, because you will need them if you claim with an external insurer afterwards.

Is a buy-down at the counter or a separate excess insurance better?

That depends on your situation. A buy-down at the counter is reassuring and usually requires no advance payment in the event of damage, but it is often more expensive. A separate excess insurance is usually cheaper, but in the event of damage you usually advance the excess yourself first and claim it back afterwards. In that case, make sure you have the amount available on your credit card.