Rental car insurance excess

What is car rental excess insurance?

Rental car excess insurance is a type of insurance policy that covers the excess car rental companies charge if the car is damaged or stolen.

Unlike regular car insurance excess, rental car companies can charge an exorbitant amount - as high as $8,000 - while rental car excess insurance can cost only a few bucks a day.

Here’s how it works:

You purchase rental car excess insurance separately or as part of your travel insurance policy prior to your trip. Let’s say during your trip, you unfortunately get into an accident and your rental car is damaged. Rather than having to fork out thousands of dollars to the rental car company, you reach out to your insurer to start a claim and have the cost covered.

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International or domestic cover	Eligible driver age	Starting price (Per day)	Cover	Excess	Underwriter
Car hire excess	Both	21-75 years	$9.29 ($0 excess)	From $4,000 to $8,000	No excess	HDI Global Specialty SE - Australia	Get quoteView details	loading
RACV	Domestic cover only	18-110 years	$2.74 (for $1,000 cover)	From $1,000 to $8,000	Choice of $1,000, $2,000, $3,000 … up to $8,000	Tokio Marine & Nichido Fire Insurance Co., Ltd	View details	loading
Rentalcover.com	Both	19-99 years	$7.58	Up to $100,000	No excess	Asservo Mutual	View details	loading
Tripcover	Both	19-99 years	$11.15	Up to $100,000	No excess	Assetinsure Pty Limited	View details	loading

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*Prices are based on a 15-day hire in Australia, as of September 2025. Benefits vary from brand to brand. Always read through the product disclosure statement (PDS) to make sure the product is suitable for you.

What kind of cars are covered under rental car insurance excess?

When choosing a policy, be mindful and make sure you understand your agreement. There can be big differences between policies so it's relatively safe to say that you get what you pay for. Car rental excess insurance policies are designed to cover an excess charged by a third party. So if the damage caused to your rental car is not approved as an insurance claim, an excess isn't charged and you won't be able to use your car rental excess insurance policy.

There are some situations and events when car rental excess insurance will not provide any cover such as:

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.

Is it really worth it?

Absolutely, and we’ll show you why. To give you an idea of what you could be paying if you don’t take out rental car excess insurance, we’ve compiled a list of the minimum excesses charged by major rental companies in Australia. These charges are based on standard 2WD vehicles, that means that the excess amount can increase if you're renting a more expensive vehicle. If you decide not to take out any type of rental car excess cover, you risk having to pay these amounts if the rental car is damaged or stolen.

In the diagram below, we've compared the price of a policy from Rentalcover.com (in blue) against the price of purchasing cover through a car hire company (in red). You can see a significant difference in price with Hertz being almost five times more expensive than Rentalcover.com. Save money by buying a standalone policy instead of getting cover from a rental company.

Another consideration is that some of these rental companies may only offer an "excess reduction" which lessens your out-of-pocket expenses but doesn't always make it zero.

^{*Prices are based on a 15-day hire in Australia as of July 2025.}

Car rental excess insurance vs collision damage waiver — are they the same thing?

Collision Damage Waiver (CDW) and car rental excess insurance are often confused, but they are not the same thing. While both are designed to limit your financial risk if a rental car is damaged or stolen, they work in different ways and are provided by different parties.

A Collision Damage Waiver (CDW) is offered by the car rental company. It is not insurance, but a contractual agreement where the rental company waives its right to charge you the full cost of damage or theft. In most cases, CDW reduces your liability to a fixed excess amount, which can still be several thousand dollars. CDW policies often include exclusions, such as damage to tyres, windscreens, the roof, underbody or damage caused off-road.

Car rental excess insurance is a separate insurance policy entirely. If the rental company charges you an excess after an incident, the excess insurance reimburses you for that amount after you make a claim. It’s also generally much cheaper than CDW and often provides broader cover, including items that CDW may exclude, such as glass, tyres, keys and towing costs.

The two products are not interchangeable. CDW limits how much the rental company can charge you in the first place, while excess insurance covers the amount you are charged. Many renters use both together: CDW to cap their upfront liability and excess insurance to recover any excess they have to pay. Others choose premium CDW with a zero excess for simplicity, although this is usually the most expensive option.

Tips for selecting car rental excess insurance

Choosing the right car rental excess insurance can save Australians thousands of dollars if something goes wrong during a hire. That’s why we’ve listed a few tips to help you find the right cover that suits your travel plans and budget.

Check what’s actually covered

Not all excess insurance policies provide the same level of protection. Look for cover that includes damage, theft and vandalism, as well as the rental company’s excess charge.

Review policy exclusions and conditions

Excess insurance will only apply if you follow the rental agreement terms. Claims may be denied if the vehicle is driven off-road, by an unauthorised driver or under the influence of alcohol or drugs.

Understand the the claims process

A simple and efficient claims process is essential. Check how claims are lodged, what documentation is required and how long reimbursements typically take. Policies with clear instructions and reasonable payout timeframes can reduce stress if an incident occurs.

Match the policy to your travel needs

If you hire cars regularly in Australia or overseas, an annual multi-trip policy may be more cost-effective than buying cover for each rental. Also ensure the policy covers international rentals if you plan to drive overseas, as some Australian policies have country restrictions.

Balance cost and coverage

While it’s tempting to choose the cheapest option, value matters more than price alone. Paying slightly more for comprehensive cover can help avoid large out-of-pocket expenses later.

Taking the time to compare car rental excess insurance before your trip can help you avoid pressure at the rental counter and ensure you’re properly protected, whether you’re hiring a car in Australia or overseas.

Frequently asked questions

• Does travel insurance cover car hire?

  Travel insurance can cover you for rental car excess insurance, but it doesn't cover your rental car as such.

  When you hire a car, the rental company will usually include a loss damage waiver (LDW) or collision damage waiver (CDW) in the price of the hire. This will generally cover the car if you get into an accident or cause damage to the car. While you won't have to pay for the repair directly, the rental company will charge you an excess amount which can usually vary from $0 to $8,000. This is where travel insurance can help.

  If your travel insurance policy includes rental vehicle excess insurance, then your insurer will cover the excess amount charged by the rental company so that you don't have to pay for it, as long as your limit is high enough.

• What's an excess?

  An excess is a fixed amount charged to pay for losses/damage. The renter agrees to this amount in the rental agreement and it's usually an out-of-pocket expense if the renter hasn't taken out insurance against it.

• Is there a difference between rental car insurance and car rental excess insurance?

  Not really, both of them protect you from out-of-pocket expenses which is the most important thing. Rental car insurance will usually cover you for direct losses to the car, whereas car rental excess insurance covers you for the excess amount charged by the rental company for the losses.

• Do I need rental car insurance?

  Car rental insurance isn't usually compulsory but rules can vary between countries. At the very least, you will usually need a collision damage waiver or loss damage waiver that is the most basic form of insurance when renting a car.

• Can I buy rental car excess insurance after I pick up the rental car?

  In most cases, no. You can buy rental car excess insurance at any time up until the point of pick up.

• Can I buy rental car excess insurance if I'm an overseas visitor and renting a car in Australia?

  Yes, as an overseas visitor you may be eligible for cover with brands such as Rentalcover.com, Car Hire Excess and Tripcover provided you have the right driving permits and stick to the rental agreement of your car hire.

• Am I covered for annual/multi-trips?

  If you purchase an annual multi-trip policy for domestic or international travel, it will provide car rental excess cover for all trips you take during a 12-month period.

• Will my standalone car rental excess insurance policy cover me for multiple, separate rental vehicles within the same trip?

  No. If you hire two separate vehicles you will be liable for two sets of excess fees from your car rental company, so you will need to purchase separate policies. However, travel insurance can provide cover that applies to any vehicles you hire throughout your trip.

• Which types of vehicles can I get cover for?

  Most insurers will cover any vehicle that has been rented from a licensed motor vehicle rental company, up to a certain weight limit. This includes:

  • Cars. Sedans, hatchbacks, coupes, station wagons, SUVs.
  • Four-wheel drives. 4x4 vehicles.
  • Campervans and motorhomes. Usually up to 4.5 tonnes.
  • Minibuses. Usually up to a 12-seater.

  Make sure you read the PDS carefully to see if your vehicle type is automatically covered, as some insurers may require you to take out a separate policy for larger vehicles like campervans, motorhomes and minibuses.

  Commercial vehicles of any kind will not be covered by a standard rental excess insurance policy.

• Will I be covered if I drive on an unsealed road?

  Driving on sealed roads only is a common condition on car rental contracts, and car rental excess insurance policies will not provide any cover if you breach your rental contract. Check the contract and your insurance PDS for more information.

• Does my complimentary credit card travel insurance include car rental excess cover?

  Yes. This feature is available on some credit cards.

• Do rental cars automatically have insurance?

  Yes. No matter where you are in Australia, it's mandatory to have third-party insurance in order to register a car, so make sure the rental company has this type of cover in place. Third-party insurance covers you when you cause injuries to other people.

  The rental company's basic level of cover will automatically set your liability in the event of damage to the vehicle at a certain level, typically around $3,000 or $4,000. This is the excess you will need to pay, but it can also be known by names such as collision damage waiver, loss damage waiver and damage liability fee.

  If you want to reduce this excess, you can purchase cover through the rental agency or one of the other options.

• Accidental damage excess vs single-vehicle accident excess

  Reading the fine print of rental car insurance cover may be a boring task but it's also an important one. Giving the terms and conditions a quick read is an easy way to pick up on any crucial distinctions that can make a huge difference to your level of cover.

  For example, some insurance policies will only reduce your rental excess if your car is involved in an accident with another vehicle. This is called the accidental damage excess. However, many people are unaware that if they are involved in a single-vehicle accident, such as scraping the car on a wall or maybe hitting a kangaroo, a separate excess will apply on top of the accidental damage excess. This second charge is the single-vehicle accident excess, and can end up adding another couple of thousand dollars to your overall bill.

  Most hire car companies will not make you aware of the single vehicle accident excess when you take out cover. Read the fine print of any rental agreement before signing it to familiarise yourself with exactly how many excesses each policy contains, and in which situations they apply.

• Car rental excess insurance vs travel insurance

  Most comprehensive travel insurance policies, whether for domestic or international trips, will include car rental excess insurance as a built-in feature. Those policies that don't include it as standard will usually offer it as an extra-cost option.

  So what's the difference between standalone car rental excess insurance and comprehensive travel insurance and which option is the best choice for you? Check out the comparison table below to help you decide.

  	Standalone car rental excess insurance	Comprehensive travel insurance
  What is it designed to do?	Cover car rentals only.	Cover a broad range of travel risks and events.
  How much excess cover is available?	Can cover up to $8,000.	Cover usually limited to $5,000.
  What damage is covered?	Covers an extensive range of damage.	May exclude costs such as damage to bumpers, interior trims, windscreens, tyres and single vehicle accidents.
  Does it cover anything else?	Yes. Luggage and personal effects.	Yes. Overseas medical expenses Trip cancellation and interruption costs Lost and stolen luggage Travel delay Luggage delay Many other benefits
  How much does it cost?	Varies depending on insurance provider, length of car hire, standard excess payable and other factors. Prices start from around $6 a day.	Varies depending on many factors including length of journey, where you're going, number and age of travellers covered etc.
  Why you should consider it	Designed specifically for rental cars and offers a higher level of cover for rental excess than travel insurance. Offers cover for damage caused by a broad range of events. Covers all drivers listed on the car rental agreement. No distance restrictions applied to domestic journeys.	Provides crucial cover for car rental excess. Also covers many other expenses that could ruin your holiday. Can give you greater peace of mind when you travel.

• When should you buy travel insurance instead of car rental excess insurance?

  If you think you could benefit from the extensive additional cover provided by comprehensive travel insurance, you should definitely consider buying it instead of standalone rental excess insurance. Travel insurance includes a long list of benefits for travellers, including cover for:

  • Overseas emergency medical expenses
  • Cancellation costs when unexpected circumstances force you to cancel your trip
  • Lost, stolen and damaged luggage and personal belongings
  • Travel delays and delayed or misplaced luggage

  • Theft of cash
  • Trip interruption
  • Personal liability for causing death or bodily injury to someone else

  Particularly if you're planning an overseas holiday, travel insurance is simply an expense you must consider. Medicare doesn't cover your medical costs overseas, so unless you're travelling to a country with which Australia has a Reciprocal Health Care Agreement, travel insurance is the only thing standing between you and potentially massive medical bills.

  If you're looking for peace of mind and protection for a broad range of risks and events, travel insurance may very well be the best choice.

• How to make a car rental excess insurance claim

  If you purchase excess reduction cover from a car rental company, you'll simply have the reduced excess charged to your credit card after returning the vehicle. However, if you're covered by domestic travel insurance or standalone rental excess cover, you'll need to pay any excess you're charged out of your own pocket and then lodge a claim with the insurer to be reimbursed.

  The process for lodging a claim will vary depending on the insurer, but you will usually need to follow a few simple steps:

  1. Download and complete a claim form.
  2. Provide copies of any supporting documentation requested by the insurer, such as police reports, repair invoices and copies of the rental agreement.
  3. Submit your completed claim form and supporting documents by post, fax or email.

  Your claim will then be processed and paid as soon as possible. Please note that the benefit you receive may not cover admin and/or transaction fees charged by the rental company.

Written by

Jessica Prasida

Travel Insurance Expert

Jessica Prasida brings a decade of experience in the travel industry, including over four years as a travel agent and branch manager at STA Travel. She holds a Bachelor of Business and a Master of Marketing from the University of Technology, Sydney, as well as a Tier 1 General Insurance qualification that complies with ASIC guidelines. An avid traveller herself, Jessica combines her professional expertise with a passion for ensuring safe and enjoyable journeys for all travellers. Jessica was a Travel Insurance Publisher at Finder from 2019 to 2024. See full bio

Co-written by

Ceyda Erem

Senior writer

Ceyda Erem is Finder’s senior writer for insurance and has almost 10 years of experience writing about personal finance. Formerly a copywriter for several business and finance clients, Ceyda has written hundreds of articles, guides, blogs and more to ensure Australians stay in the loop about how to best manage their money. She has a Bachelor of Arts, Majoring in Writing from Macquarie University. See full bio

Ceyda's expertise

Ceyda has written 61 Finder guides across topics including:

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