How do I know if my insurance covers rental cars?

Losing the use of your car after it’s stolen or damaged in an accident can be frustrating. One day you’re conveniently moving about in your vehicle, and the next day you are figuring out public transport or asking friends for rides. Luckily, if you are covered by either third-party fire and theft car insurance or comprehensive car insurance, your insurance provider may cover the cost of renting a car. Keep in mind that some insurers may only offer rental car coverage as an add-on, especially if you are at fault for the accident. Plus, if any damage occurs to the rental car while in your possession, your insurance policy may not cover repairs to the vehicle.

Does insurance cover a rental car for repairs?

While damage to a rental car is typically considered the renter’s liability, you’ll need to check the car rental agreement to understand the specifics. Look for terms like “loss damage waiver” or “liability coverage”, which indicate that your liability for damages may be reduced to just the excess, which is the part of the cost of repairs you agree to pay out of pocket. This excess can be a significant expense, and if there are multiple incidents, you may be charged more than one excess. However, you do have options to help you reduce this excess.

Suppose you’ve rented the car through an agency recommended by your insurance provider after a theft or an accident. It is possible that your insurance policy already covers excess reduction as part of the car rental option. This is not the same as waiving the excess altogether - you’ll still need to pay some amount as excess. Alternatively, if you’re paying for the rental and getting a reimbursement from your insurer, you can check if the credit card you’re using has a car rental excess insurance benefit. Such an insurance policy covers only the excess if you’ve abided by the rules stated in the rental car agreement.

What does rental car insurance cover?

Rental cars usually only come with compulsory third-party insurance, which is part of their registration anywhere in Australia. If your rental car is covered by your comprehensive or third-party fire and theft car insurance, you may not need to buy separate car insurance for rental cars. However, the rental agency may ask you to cover the car rental excess, which can run into thousands of dollars, and make it necessary to buy car rental excess insurance. If you have rented a car while on a trip that is covered by travel insurance, you may not need to spend the extra cash on car rental excess insurance. Check if your travel insurance policy also covers car rental excess and what you need to do to make use of it.

As you’ll likely find with any insurance policy, car rental excess insurance only works if you stick to the terms of the rental agreement. Consider checking what the agreement says about your liability as the person renting the car as well about the exclusions, or incidents that can be considered as a breach of the agreement. The car rental agency may offer you the option of reducing your excess for an additional fee, but this may sometimes make the rental cost unaffordable.

It’s important to remember  to inspect the rental car thoroughly while at the agency location and make sure there is no prior damage to the vehicle. The rental agency may ask you to complete a damage report, which you should certainly consider. Damage to the roof, undercarriage, windscreens, or tyres are often part of a car rental agreement’s exclusions, so consider paying the most attention to  those parts of the car. You may want to take photos or videos in case they’re needed as evidence. In addition, you could note down the car’s odometer reading to see if there’s any difference with the reading listed on the agreement.

Does my credit card cover insurance on a rental car?

If you’re paying for your car rental using a credit card, you can check if the card offers car rental excess insurance as a benefit. Note that this is not the same as full coverage rental car insurance. You’ll need to check whether the excess insurance policy restricts your choice of rental cars or is only valid for specific driving conditions. Such a policy can also have certain exclusions, and if that doesn’t work for your car rental, you may need to buy more suitable excess insurance from another provider.

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