What is car rental excess insurance?

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

When you rent a car in Australia, most rental companies will offer optional comprehensive car insurance. These insurance products come at a cost and can seem expensive. This is because it’s a short term policy and you generally won’t be given an option to choose between insurers. You’ll simply have to go with the rental company’s preferred insurer.

It’s important to carefully read the insurance policy’s product disclosure statement (PDS) to understand exactly what you’ll be covered for in the event of an accident and the excess costs.

Car insurance excess is the out-of-pocket amount you’ll have to pay if you need to make a claim on your rental insurance. The rental agency may offer you the option of reducing your car rental excess, sometimes to zero, for an additional daily or lump sum fee.

However, lowering your excess to zero may not be favourable as it will likely increase the cost of renting the car, sometimes to the point of 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 you check when buying car rental excess insurance?

If you are buying standalone car rental excess insurance, the first thing you’ll want to check is whether there are any restrictions on the type of vehicle you can rent and what the driving conditions need to be. For instance, you may be planning to drive a four-wheel-drive 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 you’re buying is valid in the countries you’re visiting.

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 example, you may not be able to file a car rental excess insurance claim if your name is not listed on the car rental agreement, or if you’ve violated any of the terms of service while 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 you 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-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 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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