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Hidden car rental costs may drive you mad but you could end up in trouble if you opt to go without, warns Jeremy Gates.

Many holidaymakers prefer the freedom of booking their own accommodation, flights and transport, rather than opting for a package deal. But while this holiday style may have many plus points, people could also be stung by hidden costs, especially when hiring a car.

According to the Post Office Travel Money Car Rental Report, nearly two-thirds of holidaymakers who hire a car to drive overseas pay only the basic rental charge and fail to take out excess waiver insurance (EWI), laying themselves open to huge bills if there’s an accident, or if the car is stolen.

These excess charges vary enormously across the popular holiday destinations, from £400 in Turkey to £1,064 in Switzerland, but even on the lower scale, they are clearly charges best avoided.

So why do people not automatically take out EWI?

One reason is that paying for extra car cover at certain airports can often add hundreds of pounds to rental costs. For example, including EWI and tyre, undercarriage and window damage insurance adds £152 to a week’s basic car rental package of £124 on the Costa del Sol while the charge for an additional driver adds another £41. Costa Blanca, Tenerife, Majorca, Larnaca and Dublin also saw hire costs double with the adding of EWI.

Andrew Brown, of Post Office Travel Money, says: “Car hire costs can go through the roof when extras are added so it is understandable that many motorists take the cheapest rate offered when booking online.

“However, the consequence of not paying for the extra insurance could be a much higher bill if you have an accident, or if another driver hits your car and fails to leave personal details.”

There is a way around the problem, Mr Brown says, if you take out an insurance policy before leaving home for a fraction of the cost of EWI. Post Office Travel Money reckons this can cost as little as £14.

You could also have your holiday in the US, where EWI is included as standard in all car hire packages. As a result of this, car rental in Florida works out cheapest of 20 destinations surveyed (around £165). This cost was almost a third less than in the lowest-priced European destination, Bulgaria, where a week’s car rental from Burgas Airport cost £242 including fuel and the two extras.

The most expensive destinations for car hire were Switzerland (£465 – pick up from Geneva Airport), Italy (£491 – Pisa Airport) and Norway (£520 – Oslo Airport).