Car rental excess insurance provides cover for the excess charge imposed by a car rental company when your hire vehicle is stolen, maliciously damaged or is involved in an accident (even if the accident wasn’t your fault). The excess payable varies across rental companies but it generally starts at around $3,000 and can be more than $5,000 in some cases.
If you purchase car rental excess insurance, this excess can be reduced to a much smaller amount or even cancelled altogether. And when you consider that this type of insurance is available from $6 a day, it’s well worth considering for some extra peace of mind the next time you hire a car.
Car rental excess insurance can provide two types of cover. Depending on the insurance policy you choose it can either:
- Reduce the excess to a more manageable amount, such as $300 instead of $3,000
- Remove the excess altogether
In cases where the cost of repairing the vehicle costs less than the excess, insurance will cover the repair expenses instead.
Understandably, car rental excess insurance that removes the excess entirely is usually more expensive than a policy that reduces the excess.
Premiums are typically charged at a daily rate – for example, if cover costs $10 a day and you’re hiring a car for seven days, the total charge would be $70.
Most car rental excess insurance policies will cover you for the following types of damage:
- Multiple- and single-vehicle accidents
- Cracked or damaged windscreens
- Overhead damage
- Cracked or damaged lights
- Damage to the car’s undercarriage or wheels
- Damage to bumpers and trim
- If the vehicle is stolen while in your custody
- Cost of returning the vehicle to the nearest depot if you are medically unfit to do so
- Repair or replacement of luggage and personal effects that are stolen, accidentally damaged or permanently lost. Maximum payment will be applied (usually around $500)
Excess reduction cover straight from rental company
If you’ve hired a car before, you’ve probably been encouraged to purchase this type of cover by rental company staff when picking up your vehicle. This insurance is arranged directly through the rental company, making it a quick and convenient option, and requires you to pay an additional charge for every day you rent a car. However, it’s typically more expensive than other options.
The most convenient option if you haven't already bought travel insurance or car rental excess insurance.
Standalone car rental excess insurance policy
The second option is to purchase a standalone car rental excess insurance policy direct from an insurer. These policies are specifically designed to protect you against the excess and often cover damage to areas of the car that are excluded by some rental companies, such as windscreen and tyre damage. It’s usually also cheaper than the cover offered by the rental company.
This is a great option if you need a flexible policy designed specifically for car rentals.
Travel insurance policy with rental excess insurance feature
The final option is to take out comprehensive travel insurance that offers protection for your car rental excess. Many policies include this cover as standard, but some offer it as an extra-cost option. This not only ensures that you can enjoy cover for car rental excess, but also for a broad range of other travel risks.
This option is ideal if you're already planning a trip that requires comprehensive travel insurance.
|How it works||Pros||Cons|
|Cover from the car rental company||Can be purchased straight from your rental company when you pick up the vehicle. Some companies allow you to reduce the excess only, while others also offer insurance that can see the excess removed altogether|
- More affordable than paying the excess
- Usually more expensive than other car rental insurance excess options
- Exclusions and terms and conditions apply
|Standalone car rental excess insurance||You purchase a policy direct from an insurer before picking up a hire car. The policy provides cover for the car rental company excess up to a set limit.|
- Designed specifically for car rentals Cheaper than cover from the rental company
- Usually provides more comprehensive cover than rental company policies and travel insurance policies
- Greater choice available so you can compare policies and select one that’s right for you
- Can be expensive if you’re only hiring a car for a short period
- Doesn’t provide additional benefits like comprehensive travel insurance does
|Comprehensive travel insurance||Car rental excess cover is included as a benefit on comprehensive travel insurance. Policies can be purchased direct from the insurer and can also provide an extensive range of other benefits.|
- Included as a standard feature on many policies
- Can be an affordable option if you need high-level cover for a variety of risks
- You can also take advantage of the many other benefits provided by comprehensive travel insurance, such as cover for overseas medical expenses
- Some policies only offer this type of cover as an extra-cost option
- Only available on comprehensive travel insurance policies, not on basic policies
- Exclusions apply
There are some situations and events when car rental excess insurance will not provide any cover. Your claim will not be paid if:
- You use the rental vehicle in breach of your rental agreement
- You use your rental vehicle without a valid licence
- Your claim is for administrative charges or fees imposed by the rental company
- You were driving the rental car while under the influence of drugs or alcohol
- You failed to act sensibly to protect the vehicle or your property
- You did not do everything possible to reduce or minimise your loss
- It arises because you break the law
- You travel against medical advice
- Your claim arises due to a pre-existing medical condition
- Your claim is for consequential loss of any kind, for example loss of enjoyment
- Your claim arises due to mental illness, depression, anxiety or stress
- Your claim arises because you participate in any race, speed or time trial
- Your claim arises from a government authority confiscating, detaining or destroying anything
You should also be aware that different exclusions sometimes apply to each of the types of car rental excess cover available. For example, travel insurance may not cover you if you use the rental vehicle to carry items other than luggage, or if your car is damaged while being driven on an unsealed surface. Meanwhile, excess reduction cover from your rental cover may not cover the excess payable if your vehicle suffers windscreen or tyre damage.
With this in mind, make sure to check the terms and conditions of whichever cover option you choose to work out when you will and will not be covered.