Are you planning to hire a car for your next overseas trip, or a holiday in Australia?
I hire a car regularly and over the years I have learnt a lot about car rental insurance, and how to get the best deal. See below how you can halve or more the cost of car rental excess insurance…
What is car rental excess insurance?
Car rental excess insurance provides cover for the excess charge imposed by a car rental company when your hire vehicle is involved in an acident, damaged or stolen. The excess payable varies across rental companies but it generally starts at around $3,000 and can be more than $5,000 in some cases.
When you pick up your rental car, you will be asked if you want to take out additional insurance. If you decide not to take the excess reduction insurance and the car is damaged you will have to pay to cover the cost of the damage up to a pre-determined amount – this is known as an excess charge. Depending on the car hire company this excess charge for any car damage can be up to $5,000. To reduce this excess cover to $0 or a smaller figure, eg $500, you need to take out excess reduction insurance, sometimes referred to as additional car insurance or SuperCover by the car hire companies.
Excess reduction insurance purchased from the car hire company when you pick up the car in comparison to other options is expensive and can double the cost of hiring a car.
Rather than adding the cost of car hire excess insurance to your car hire cost when picking up your car, did you know that you can purchase car hire excess insurance from other insurance companies at a much lower rate. If you shop around for car rental excess cover before picking up a car you can save a significant amount of money on your car hire.
What happens if I don’t take out car rental excess insurance?
I have learnt this from personal experience whan I incurred some damage during a car hire with Hertz in Brisbane. The way that this works is that if you damage the car during the rental period the car hire company will charge your credit card with the amount of excess in your car hire agreement.
- Hertz has a standard excess amount of $4,000
- You have hired a car from Hertz and during the rental period the car is damaged.
- When you return the damaged car to Hertz they will deduct up to $4,000 from your credit card.
- This amount is taken even if the damage is not major, eg a dent that may cost less than $1,000 to repair.
- The repair is undertaken by Hertz and then, at a later date, your credit card will be refunded the difference.
- For example if the cost of repair ends up being $1,000, you will initially have $4,000 deducted from your credit card, and then you will receive a $3,000 credit back to your card when the repair is complete.
- Depending on the amount of damage, you may have to wait quite a while for the credit, during which time you will have $4,000 less available on your credit card.
How much is the excess if you don’t have insurance?
Currently the excess charged by car rental companies in Australia if your hire car is damaged or stolen is as follows (subject to change):
- Avis: $3,017
- Budget: $2,850
- Europcar: $4,180
- Hertz: $4,000
- Thrifty: $4,000
What are my options?
- Pay for excess insurance when you pick up the car
As mentioned above, when you pick up your hire car you are given the option to take out excess insurance. This insurance is arranged directly through the rental company, and requires you to pay an additional charge for every day you rent a car. This is expensive and can double the cost of your car hire
Example – Hertz car hire in Brisbane for 7 days.
Cost of car hire (Corolla) with airline staff discount = $212.07.
Cost of 7 days excess insurance @ $25.90/day = $181.30.
Total = $393.37
Example – Hertz car hire in London for 7 days.
Cost of car hire (Qashqai) with airline staff discount = $240.96.
Cost of 7 days excess insurance @ $48.64/day = $340.55.
Total = $581.51.
- Travel insurance policy with rental excess insurance feature – overseas travel only
If you are renting a car overseas check your travel insurance policy as it may offer protection for your car rental excess. Many policies include this cover as standard, but some offer it as an extra-cost option.
With nib travel that you can purchase via TIDD at a 40% discount, at the time of writing the annual multi trip overseas policy covers up to $5,000 car rental excess insurance. You can increase this excess cover by paying $12 per $500 increase. (Note the normal charge is $20 per $500 however through TIDD you get a 40% discount on the additional excess cover). For your 40% discount through TIDD please click the following link: nib 40% Travel Insurance Discount
- Purchase car rental excess insurance prior to picking up the car
The third option is to purchase a standalone car rental excess insurance policy direct from an insurer. These policies are specifically designed to protect you against the excess and often cover damage to areas of the car that are excluded by some rental companies, such as windscreen and tyre damage. This insurance is cheaper than buying direct from the car rental company.
I hire a car regulalrly. In the past 12 months I have hired a car twice in the UK for a total of 5 weeks, and I have also hired a car in Brisbane on several occassions totalling around 2 weeks. If I had opted to buy my additional car insurance (Super Cover) from Hertz it would have cost me AUD$48 per day in the UK, and AUD$25.90 per day in Australia. That’s a total of AUD$1,680 for the UK and AUD$362 for Brisbane.
What did I do – I purchased a annual multi trip policy from WorldwideInsure which covered my overseas car hire excess, and paid an additional premium to add on any car hire is used in Australia. The overseas car rental insurance was AUD$182, and the additional Australian coverage was AUD$30, a total of AUD$212 for a annual multi trip policy covering my car rental excess insurance both overseas and in Australia.
What does car rental excess insurance cost?
If you Google “car rental excess insurance” you will find various Australian and overseas insurance companies that offer car hire excess insurance. See below for some examples and their costs:
|Company Website||Overseas Daily Cost||Within Australia Daily Cost||Overseas Annual Multi Trip||Overseas Including Australia Annual Multi Trip|
|Rentalcover.com||$13.78||$14.11||Not Available||Not Available|
|Tripcover.com.au||$13.81||$10.39||Not Available||Not Available|
|Carhireexcess.com.au||$12.33||$10.37||Not Available||Not Available|
|WorldwideInsure.com||Not Available||Not Available||$182.00||$212.00|
|Daily costs are based on a 7 day rental.|
|Overseas is based on car hire in USA.|
|Rates are in or converted to Australlian Dollars (AUD)|
I cannot make any personal recommendations as to which is the best car rental excess insurance for your situation. It all depends on your destination, length of hire, what the policy includes etc. After a recommendation from a friend and some careful research, last year I purchased a annual multi trip worldwide policy including car hire in Australia from WorldwideInsure, an insurance company based in the UK. This covers me for both my overseas car hire and also my regular car hire here in Australia.
As with all insurance you will need to decide on what is best for you, but as you can see from above buying insurance from a standalone insurance provider rather than from the car rental company can offer significant cost savings.
You should also be aware that different exclusions sometimes apply to each of the types of car rental excess cover available. For example, travel insurance may not cover you if you use the rental vehicle to carry items other than luggage, or if your car is damaged while being driven on an unsealed surface. Meanwhile, excess reduction cover from your rental cover may not cover the excess payable if your vehicle suffers windscreen or tyre damage.
With this in mind, make sure to check the terms and conditions of whichever cover option you choose to work out when you will and will not be covered.
If you have any questions about the above please do not hesitate to contact me.