Car Hire Insurance: Smarter Alternatives

UPDATE: Car hire excess insurance is an expensive business but we’ll tell you how to save big time. In fact, getting the right car rental protection could cut your costs by $100s.

We’ve revamped this page by popular demand to provide all the information you need to ensure you are well covered. But please be sure to double check all the terms and conditions of any policy before you commit to ensure you understand your cover. Before you proceed, you may want to make sure you understand all the car hire insurance jargon and terminologies.

• What you need to be aware of
• High price of getting extra protection the conventional way (from car rental companies)
• You have choices! Save big time with alternative car hire excess insurance providers
• With an inclusive Travel Insurance policy
• With a specialized Car Hire Excess Insurance policy

Standard excess inclusion
All car hire throughout Australia comes with a basic level of insurance commonly known as Standard Liability or Collision Damage Waiver (CDW). That often still leaves you liable for up to about A$3,000 for any damages to the rental car (this excess amount varies with different companies so do always check)

Are you under 25
If you are between 21-24 years, standard liability excess levels tends to be higher (e.g. a standard liability excess of A$2,500 renters 25+ years could be A$3,000 for 21-24 years)

Standard exclusions
Single Vehicle Accidents (SVA) and Windscreen, Headlights and Tyres (WHT) cover are often excluded and has to be added on. In addition, insurance does not cover damages to the overhead, underbody, interior or roof of the car – for all these you’ll just have to keep your fingers crossed.

First, some indicative prices of taking out first-level/cheapest Excess Reduction i.e. reducing from A$3,000 to A$330 (not 0), and without WHT or SVA :

The independents tend to have fewer options available like not offering SVA, WHT or Full Protection.

A quick calculation and you’ll find taking out Excess Reduction protection on a 7-day car hire can blow up your final cost by a staggering A$80-200! But don’t take it and you leave yourself open to even more charges if you damage the car.

So how now brown cow? Well that depends on you. Evaluate what level of insurance you feel comfortable with. Naturally that decision will very well be influenced by the price of taking out additional car hire insurance and here are some great alternative ways to save big while being covered:

For Australians travelling domestically, inclusive travel insurance is the way to go. If you’re an Australian going overseas or an international traveller coming to Australia, take out a specific car hire excess insurance policy.

We’ve uncovered these travel insurance policies that include rental car excess coverage as one of its benefits. Our emphasis for selection is on the car rental excess cover and price but check how the other benefits suit you.

For Australians, the travel insurance providers we’ve recommended typically cover campervans, 4WDs and vans as well as standard rental cars. No excess applies in the event of you make a claim on the car hire benefit. Their rates are usually staggered rather than continuous (e.g. price will stay at A$30 for 6-8 day policies), meaning different companies can offer value depending on your exact required duration so you’ll do well to compare a couple.

There are a handful of third party insurance companies specializing in covering just your car rental excess for a lot less than the car rental companies’ offers. For hires under 20 days, taking a single trip daily rate policy will usually be the way to go. Any longer and you’ll want to look at getting an annual policy.

Features of the Typical Policy
These policies commonly insure you for up to A$3,600 (£2,000) per claim and A$5,500 (£3,000) per rental agreement and have NIL Excess. They are available to anyone aged between 21-74 years (some allow older renters) and applies to standard non-luxury rental vehicles up to the size of vans that have 8 seats or less. They do not cover motorhomes or caravans. As a great bonus perk, the car hire insurance providers often cover damages to the undercarriage, windows and tyres which is almost always excluded in standard coverage. These are TYPICAL features but remember to always double check the exact terms and conditions.

The Procedure for Claims
Car hire excess insurance differs from the Excess Reduction options offered by car rental companies in that the former covers you, not the rental car. The procedure would be you rent a car with the Standard Liability i.e. NOT taking the Excess Reduction option, and then if you incur any damages, the rental company will still charge you up to the limit of the standard excess e.g. A$3,000. You will then claim reimbursement from the car hire excess insurance company. Be sure you acquaint yourself with all the documentation and procedures required for making a claim.

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