By default, rental cars in Australia include a basic car hire excess waiver that limits the amount you have to pay in case you get in an accident or the vehicle is stolen while it is with you. However, even with this default protection, the standard excess or deductible remains high. The exact amount depends on the rental car provider but is usually between $4,000 and $4,560, and can even exceed AU$7,000 for cars and AU$10,000 for motorhomes. Worse, you have to pay even if the damage was due to someone else’s fault. Faced with that kind of risk, getting a car rental excess insurance is definitely a good idea.
If you go to a rental counter unprepared about insurance, you will get a hard sell of the firm’s car hire excess waiver, supposedly to protect you from having to pay through the nose if the car ever gets damaged or stolen. You may even hear horror stories that will make your wallet quiver in fear.
To reduce your car rental excess close to zero or down to zero, you will have to pay the rental firm at least AU$40 additional per day. So now, the good deal you found earlier does not look so appealing anymore. But with the intense pressure coming from the rental agent in front of you and the other customers waiting in line behind you, you end up buying car rental insurance just for peace of mind, while wincing internally at how the added expense turned the initially good deal into an expensive one.
But at least you have peace of mind, right?
Well, guess what? There are cheaper ways to get excess protection and peace of mind. Some of them are even free.
If you have travel insurance, check your policy first to see if it already includes car rental excess insurance. If you are not sure, contact your provider to clarify the issue.
Some credit cards also include rental car insurance so check the details of your card to see if you have that benefit, and if it covers Australia and the type of car that you plan to rent. If your card provides excess cover, use that card when booking and paying for the vehicle and decline the rental company’s insurance product.
Some organizations, such as the Royal Automobile Club of Victoria (RACV), also offer car hire insurance benefits, so see if any club you’re a part of offers such perks.
If the above benefits are not available to you, a pocket-friendly solution is to get an independent insurance before your trip instead of buying the excess insurance from the rental counter. There are many vendors that specialize in providing car rental excess insurance and such policies typically offer equivalent or even better coverage than ones offered by car hire companies, for just a fraction of the price.
Insurance products have a high profit margin for car rental companies, so if you opt to get excess protection from a third party, don’t be surprised if the rental agent still tries to push you to buy their insurance. Just decline their offer.
Also note that if you use third-party car rental insurance, the rental company may put a hold on your credit card. Then, if the rental car is damaged or stolen while in your custody, the firm will charge your credit card. It will then be up to you to get reimbursement from your insurance provider. To file a claim, you need to submit a police report and an accident report from the rental agency, and then wait for the provider to process your claim and refund your money.
While the process is more complicated and takes longer compared to just purchasing insurance from the rental desk, getting a third-party excess insurance can save you up to 70%. Moreover, it includes coverage for parts that are usually excluded by rental company insurance, such as roof, undercarriage, tires, and windshield.
Rental car excess is automatically capped in Australia, but the standard excess is still high. Car hire companies will push you to buy car rental insurance from them to reduce or eliminate the excess, but you can get the same or even better coverage from your credit card provider or a third-party excess insurance vendor. That means extra money you can use to enjoy your vacation.