Car hire excess insurance covers the amount you are liable to pay under your rental agreement if your vehicle is damaged, stolen or involved in an accident. You can pay extra with your rental company to reduce the excess however this can often double the cost of your car hire.

With excesses ranging from $2,000 - $8,000 depending on your vehicle, it's risky business not getting any cover at all. But don't fret, help is here! We have some nifty options that can save you money and reduce those hefty out of pocket expenses.

Travel Insurance & Car Hire Excess

You may be aware that travel insurance can bail you out of a number of tricky scenarios including injury, illness, luggage theft, trip delay and more. But did you know that some policies will cover your car rental excess as well?

Most comprehensive travel insurance policies have a built-in feature on both domestic and international policies so if you are involved in an incident and your rental company charges you an excess, you can claim on your travel insurance to cover this.

In the event of an accident, usually, your rental company will charge your credit card with the excess amount and then you'd be reimbursed by your travel insurer. In some cases, your policy would cover the cost of repairing the car if that works out to be cheaper than the excess. In the event of a claim, you must provide a copy of the repair account and/or receipt showing the amount charged to your travel insurer.

PROS

Extra Benefits: When you take out travel insurance for your trip, your policy will often include cover for medical expenses, trip cancellations and luggage as well as rental car excess insurance.

No additional charge: Comprehensive policies usually include rental excess cover for no extra cost – wahoo!

Campervan cover: As long as your vehicle is hired from a licenced rental company, you can also cover the excess of campervans and motorhomes (not exceeding 4.5 tonnes) which makes for happy campers.

Save yourself some bucks: When you pay to reduce your excess at the car rental desk this can increase your costs to almost double the rental. If you’re heading on holiday, taking out travel insurance with rental excess cover can save you some pennies.

Accident extras: If you're involved in an accident and found medically unfit to drive, the cost of returning your rental vehicle to the nearest depot is usually covered, along with medical expenses if you're also injured.

CONS

One policy does not cover all: All drivers need to be listed on the travel insurance to be covered whilst driving the hire car.

Exclusions: Your policy will mirror the rental agreement so any exclusions will also apply to your excess cover. Make sure you're reading the t&cs to see if windscreens, tyres and roofs are covered as well.

Driving domestically: If you’re travelling within 50kms from your home your policy probably won’t cover you for car hire excess. Check with your insurer to see if any distance restrictions are in place.

Motorcycles & Vans: Unfortunately, if you're hiring a motorbike or moving van you won't be covered for the excess as they are not considered a 'rental vehicle' under travel insurance definitions.

Compare rental excess

General Advice Warning: The contents of this article were accurate at the time of writing. Insurers change their policies from time to time, so some information may have changed. You should always read the Product Disclosure Statement of your chosen insurer to understand what is covered and what isn't. The information provided is of a general nature only and does not take into account any personal objectives, financial situation or needs. Before making a decision you should consider the appropriateness of the information having regard to your personal circumstances

Reduce With Your Rental Company

You can choose to pay an extra daily fee with your rental company to reduce your excess however, this often turns your cheap car hire into a not-so-cheap and affordable rental. If you have forgotten to organise your rental excess insurance this can be a convenient option however be prepared to fork out an extra $25 to $40 a day.

By comparison, travel insurance rates are much cheaper on a daily basis and will cover you for a range of additional expenses which means more value for less money. Sounds like a no brainer to us!

StandAlone Plans

You don't have to be going overseas on holiday to benefit from cheaper car hire excess options. Aussies and visitors to Australia can purchase standalone car hire excess cover.

These policies are designed specifically to cover car rental excess. They usually include circumstances that are excluded by the rental company and travel insurance policies such as damage to bumpers and trim, windscreen and tyres, single-vehicle accidents and hitting the poor wildlife crossing the road.

Main benefits of standalone plans

• All drivers listed on the rental agreement are covered behind the wheel so there's no need to purchase a policy for everyone. That's a bonus!
• Cover for motorhomes and campervans at no extra charge.
• No distance restrictions for domestic journeys (which may apply to travel insurance).
• No price hikes if you've had a history of pre-existing medical conditions.
• Certain companies offer no excess on claims.
• The longer the hire, the cheaper the daily rate.
• Country of residence is often irrelevant, so whether you're an Australian resident or here to holiday you can take out a standalone plan. Of course, these purpose-built policies don't come with all the extra travel trimmings of a policy such as overseas medical, luggage and cancellation so consider your needs carefully before making a decision.

Cover With Your Credit Card

If you have a premium or rewards credit card, you may automatically get cover for rental vehicle excess insurance. However, it’s important to note that credit card insurance generally isn’t as extensive as travel insurance or standalone policies and a number of terms and conditions usually apply.

Catches to look out for

• You must have paid for the booking using your credit card to activate the cover.
• Restrictions on the hire period (often no more than 30 days).
• International OR domestic trips are covered, rarely both.
• Only the cardholder is covered to drive the rental vehicle.
• Annual fees and interest rates of your credit card can hike up overall costs.
• Excesses range between $200 - $500 for claims.
• Limitations on coverage will apply such as exclusions for windscreens, tyres and the underbody of your vehicle. As with all policies, it’s essential that you understand the conditions that come with your cover. You may find that you’re spending in excess of what you would pay for travel insurance or a standalone policy.

Top Tips

Say no to the rental car rip-offs! Kindly refuse the extra charges to 'reduce your rental car excess' at the hire car counter. Buying travel insurance is usually cheaper than paying to reduce your excess at the rental car counter and provides you with a wide range of added benefits such as medical cover, cancellation cover and more.

It’s important to note that rental excess included in travel insurance is not rental vehicle insurance. This is usually included in the daily price of your hire car, or you can often arrange such insurance with your hire car company. You are advised to secure separate insurance for any injuries or damages your use of a hire car may cause to other people and their property.

Keep in mind that if you do have an accident, you will often have to first pay the excess amount you are liable for and then submit a claim to your insurer for reimbursement.

So...

• Always purchase your policy before picking up your rental vehicle.
• Keep a copy of your rental agreement handy.
• Read your rental agreement carefully to make sure you understand any exclusions that apply to your cover. If you’re in breach of your rental agreement you won’t be covered.
• Check the definition of a rental vehicle on your policy to make sure your vehicle is eligible – car-sharing services won’t be covered.
• Look out for extra hidden fees including toll fees, administration fees, credit card surcharges, relocation fees and excess kilometres, to name just a few.
• If you are involved in an accident and your vehicle is damaged, you’ll need to provide the following documents; a copy of your rental agreement, police or accident report, receipts of charges or repair invoice.
• Make sure you hold the correct licence for your vehicle
• Take time to research the various car hire excesses across the board. A little extra timecould make a wheel big difference!