Car Hire Insurance in Madeira: What You Need and What They Might Try to Sell You
In Madeira you need, at minimum, the basic CDW insurance included in almost every rate. But that insurance has an excess of €500-€1,500, meaning that if you have an accident, you pay that amount out of pocket before the insurance covers the rest. It also doesn't cover tyres, windows or the vehicle's undercarriage — the three most common types of damage on the island's roads. The recommendation for Madeira is to always take out zero-excess full cover including tyres and undercarriage, which adds €3-8 a day to the base price.
Types of insurance for car hire in Madeira
CDW — Collision Damage Waiver (basic insurance)
This is the insurance included in almost every rental rate. It covers damage to the vehicle from a collision, but with important conditions:
- ✓Has an excess of €500 to €1,500 depending on the company and vehicle
- ✓Doesn't cover punctured or blown tyres
- ✓Doesn't cover broken windows (windscreen, side windows)
- ✓Doesn't cover damage to the vehicle's undercarriage
- ✓Doesn't cover damage from driving on unpaved roads (in many contracts)
If you have an accident covered by basic CDW, the company can charge you up to €1,500 before the insurance kicks in. That amount is held on your card when you collect the car.
Zero-excess CDW (full cover)
Removes the excess from the basic insurance. If the vehicle is damaged in a collision, you pay nothing. It's the most important upgrade you can buy.
- ✓Extra cost: €3-6 per day on top of the base price
- ✓Removes the deposit hold with many companies
- ✓Covers collisions with no cap
Super CDW or Super Collision Waiver
At some companies, standard full cover still has a small residual excess of €100-300. Super CDW removes even that residual excess. If you see this option, ask exactly what excess remains with normal CDW before paying the extra.
TP — Theft Protection
Covers total theft of the vehicle. Rental car theft is very low in Madeira, but it's usually included in full-cover packages. Check whether it's separate or included.
Tyre, window and undercarriage cover
This is the most important cover in Madeira and the one most often excluded.
- ✓Tyres: a puncture on a mountain road can cost €80-180. Many companies don't cover it under standard CDW.
- ✓Windows: the windscreen is the most expensive part. A gravel chip on a dirt road can cost €300-500 if not covered.
- ✓Undercarriage: dirt tracks to viewpoints and levadas can damage the underside of the car. Repairs can exceed €500.
Some full-cover packages include this cover. Others exclude it despite being labelled "full cover". Ask explicitly before signing.
TPL — Third Party Liability
Covers damage you cause to others: other vehicles, property or people. It's legally mandatory in Portugal and always included in the base price. It's not something you need to buy separately.
What insurance should you get in Madeira? The direct recommendation
For most travellers in Madeira: zero-excess full cover including tyres, windows and undercarriage.
The reasons are concrete:
- 1Mountain roads have more tight bends than flat destinations. Scrapes against stone walls are common.
- 2Dirt tracks to viewpoints and levadas easily damage the undercarriage.
- 3Loose gravel on secondary roads chips windscreens.
- 4If you have an incident without full cover, the claim can ruin your trip and your budget.
The extra cost is €5-8 a day. Over a week, €35-56. That buys real peace of mind, not marketing.
Exception: if you're a very experienced driver, know Madeira's roads well and have a premium credit card that includes rental car cover (some Visa Infinite and Mastercard World Elite do), you can consider basic CDW. Before doing so, read exactly what your card covers and what excess remains.
Your credit card's insurance: does it work in Madeira?
Some premium credit cards include rental car cover. Before relying on it, check these points:
What exactly does it cover? Many cover only collision, not tyres or windows. Read the terms document, not the marketing summary.
Does it require paying for the full rental with that card? Almost always yes. If you pay part with another card or cash, the cover can be voided.
Does it have a geographic limit? Some cards exclude certain countries or territories. Mainland Portugal is usually covered; check that Madeira (Portuguese territory, but an island) is too.
What excess applies? Many card cover policies have their own excess of €200-500.
Does the rental company accept it? Some companies in Madeira require you to take out their own insurance regardless of what your card covers. Ask before booking.
What they might try to sell you at the counter that you don't need
When collecting the car, the counter agent has an incentive to sell you extras. These are the most common, and what you actually need to know:
Personal Accident Insurance (PAI): covers driver and passenger injuries. If you have travel insurance (mandatory by law for EU travel and generally recommended), it already covers injuries. You usually don't need PAI.
Luggage protection: covers theft of items inside the vehicle. Travel insurance or home insurance with travel extension may already cover it. Check before travelling.
Premium roadside assistance: most companies include basic roadside assistance. The premium upgrade rarely pays off on an island as small as Madeira, where assistance arrives quickly.
Prepaid full tank: they sell you a full tank upfront so you return it empty without worrying. The price per litre is always higher than at a petrol station. It's cheaper to refuel yourself before returning the car.
Frequently asked questions about car hire insurance in Madeira
What happens if I have an accident in Madeira with basic insurance?
The company holds the excess amount (up to €1,500) on your card. You open a claim and the insurance covers damage above that excess. If you have zero-excess full cover, you pay nothing and the process is the same but at no cost to you.
Is it mandatory to buy the rental company's insurance?
Not always. If you have sufficient cover from your credit card or travel insurance, some companies let you decline their extra insurance. But many in Madeira require it contractually. Ask before booking.
Does insurance cover me if another car hits me and drives off?
CDW covers damage to the vehicle regardless of fault. If the responsible party is identified, their insurance covers the damage. If it's a parking knock with no identified party, zero-excess CDW covers it. With basic CDW, you pay the excess even if you're not at fault.
What do I do if I have an accident in Madeira?
Call the company's assistance number (it's in the contract). If others are involved, fill in the European accident report. Photograph all damage and the other vehicle's plate. Don't sign anything or admit fault at the scene.
Does insurance cover night driving in Madeira?
Yes. Insurance doesn't distinguish between day and night driving. What some contracts do exclude is driving under the influence of alcohol or drugs, in which case cover is voided.
Does insurance cover driving on levada tracks or dirt roads?
Depends on the contract. Many companies expressly exclude damage on unpaved roads or forest tracks. If you plan to leave the main roads, ask before collecting the car or take out specific cover that includes it.
Can I buy insurance after collecting the car?
No. Insurance is arranged at pickup and fixed in the contract. You can't add extra cover once you've driven off with the vehicle.