What is car rental excess insurance?

What is car rental excess insurance?

There can be various reasons why you might need to rent a car, such as when your own is being serviced or when you need a larger vehicle for moving houses. You’ll likely need to buy a car insurance policy covering the rental car for possible damage, theft, or vandalism during the time you’ve hired it. However, you may have to agree to pay a significantly high excess, which could potentially cost thousands of dollars. Since this can be quite a hit to your savings, consider buying rental car excess insurance, preferably as a standalone policy from a different insurer to the one covering your rental car.

Can I buy a car rental insurance policy with no excess?

When you rent a car and buy a car insurance policy to cover it, you may not have the choice of forgoing an excess. In any case, this is not typically recommended as it can shoot up the cost of rental car insurance. If the rental agency offers you the option of lowering your car rental excess, consider checking how that impacts the rental fee as it may make the rental expensive enough to be unaffordable.

Buying a zero excess car rental insurance policy is usually not recommended as it may increase the cost of renting the car, even making the rental unaffordable. Consider asking the rental agency about the difference lowering the excess makes to rental costs.

You may find buying car rental excess insurance, which can cost less than ten dollars per day, more affordable but you’ll need to buy such a policy before you rent a car. If you’re travelling away from your home city or even overseas and need a rental car, consider checking if your travel insurance includes coverage for car rental excess. You may also want to see if your credit card benefits or rewards include travel insurance as well as car rental excess insurance.

What should I check when buying car rental excess insurance?

If you are buying standalone car rental excess insurance, the first thing you need to check is whether there are any restrictions on the type of car you can rent and what the driving conditions need to be. For instance, you may be planning to drive a four-wheel-drive vehicle in off-road areas, but if your car rental excess insurance policy doesn’t cover either the vehicle or the off-road driving, you could end up having to bear the excess yourself in case of an accident or theft. If you’re travelling internationally, you may need to check whether the excess insurance is valid in all countries.

In some cases, car rental excess insurance may also cover windshield damage, or damage or theft of personal effects, which may not be covered by the car rental insurance. Equally, you may want to check the exclusions of the policy so that you aren’t caught unawares if the rental car is damaged. For instance, you may not be able to file a car rental excess insurance claim if your name is not listed in the car rental agreement, or if you’ve violated any of the terms of renting the car.

Usually, the type of excess covered by such a policy is the accidental damage excess, which applies to accidents involving at least one other vehicle besides yours. This will cover incidents such as your car hitting a tree or an animal when no other car is present. To cover these, you’ll likely need coverage for single-vehicle excess. It is unlikely that this coverage will be included by default in the car rental excess insurance policy, in which case you should speak to the insurer.

Can I avoid buying car rental excess insurance?

You may not be able to rent a car unless you agree to cover the excess either out of your pocket or through a car rental excess insurance policy. However, you may not need to buy a separate excess insurance policy if it is already covered in your travel insurance policy or is available as a benefit through your credit card. In general, considering that your excess liability for damage to a hired vehicle can be a significant expense, buying a separate excess insurance policy can often be worth the additional effort and cost.

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Learn more about car insurance

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.

Can I drive a new car without insurance?

It is illegal to drive a car in Australia without insurance. Most states require that you get your insurance in place before you drive the car off the dealership’s plot. So, the answer to whether driving a new car without insurance is no, it is not allowed.

The only time you can possibly legally drive an uninsured car is when you have to get the vehicle registered. You should drive straight to an inspection station or your state's vehicle registry. You must also make sure that you take the most direct or convenient route possible.

It is important to note that your compulsory third party insurance (CTP or green slip) isn’t valid until your car is registered.

Driving an unregistered or uninsured vehicle can have severe legal repercussions. If you are involved in an accident, and are driving an unregistered and uninsured vehicle, you will be personally liable to pay compensation to anyone hurt, as well as for damages. If you are caught driving a vehicle without insurance, you may be fined or even have your vehicle seized.