Julian Knight: Car hire - I should have covered all the angles instead of winging it

I have a bit of a cautionary tale for you. Last week, I hired a car from one of the big high-street rental firms. All was going well until some speeding motorist decided they needed to drive on my side of the road and clipped the wing mirror of the hire car. The mirror rocked back but did not break off, but on inspecting the unit, I saw a small scratch on the casing of the mirror.

In retrospect, I was stupid – I was honest. I told the clerk at the car-hire firm about the scratch and how it had happened.

I hoped she would share my rightful indignation. Indeed, she made all the right sympathetic noises and said she was sure it would be "all right".

Later, I checked with my card company and the car-hire firm had debited £175. I phoned to ask why a scratch had turned into a great big dent in my wallet. The answer I was given was that there was a set scale of charges in place for this type of damage and nothing could be done.

After a quick call to a garage, I discovered that the cost of replacing the mirror in its entirety – and it hardly required that – is around £115.

Therefore, the car-hire firm would actually make a tidy profit even if it did go ahead with that work. Of course, though, they won't have replaced the mirror – preferring instead to pocket the cash and hire the vehicle out again, leaving the scratch in all its technicolour glory.

I suppose I can actually count myself lucky in that some car-hire firms, particularly those abroad, will charge their customers up to the full excess pre-agreed in the hire contract – often amounting to several hundred pounds – if there is any damage whatsoever.

Ringing up to lodge a complaint, I was told by the car-hire call- centre person that if I'd taken out the insurance offered at the point of hire then I would have been covered. In effect, then, it was my own fault.

The insurance in question, the catchily named damage excess waiver (DEW), is ruinously expensive: during the period of hire, it would have added around 30 per cent to the total cost. Like electrical retailers with their extended warranties, car-hire firms make a substantial part of their profits from flogging extra insurance.

However, where I was a little dense was in not exploring the range of third- party car-hire insurance policies that are available. For around £2 a day, it is possible to cover yourself fully against prangs in your hire vehicle.

I could also have bought worldwide annual cover, meaning that even when hiring a vehicle for a holiday abroad, I'd be protected.

I'm not one for insuring myself up to the eyeballs. Financial advisers often bang on about covering oneself against all of life's misfortunes, from loss of job to operations on a pet, but if I bought all the policies they recommend, I would only have enough money left over to sit at home, with the heating off, eating gruel.

However, if you take that attitude, I suppose you can't then complain if you have to fork out when something does go wrong.