There’s nothing worse than booking a hire car thinking you’re getting a pretty good deal, only to find the price has nearly doubled when you go to pick it up.
If this has happened to you, it’s probably because the car hire company failed to tell you about the extra charges you have to pay if you want to lower your insurance excess (the amount you’re liable for if the car gets damaged).
If you don’t fork out the extra cash, they’ll charge the full excess in case of an accident. In our examples, this could be as much as $5500. And if the repairs cost less than the excess, you’ll just have to trust them to refund the difference to your credit card.
To hire a basic economy car from Sydney Airport for a week from Avis you’ll pay a minimum of $120 a day, but to reduce your excess from $5445 to $838 for the same hire, you’ll be slugged with an additional $71 a day.
The good news is, there are alternative car hire excess insurance products available that could save you up to $61 a day on your car hire.
What are the alternatives to paying the car hire excess waiver?
Instead of succumbing to the pressure-sale tactics at the car hire counter, you can:
use the car hire excess cover in a travel insurance policy
buy a standalone car hire excess insurance policy from a different insurer.
If you’re hiring a car for a week, these are both cheaper alternatives to the excess waiver offered by the car hire company. Standalone policies also often have fewer exclusions.
So what’s the catch? The alternatives may not be as convenient. If you’re in an accident in your rental car, you may have to pay the car hire company for the damages and then claim them back from your chosen insurer.
What’s the cheapest way to reduce car hire excess?
Below, we compare the daily cost of the car hire excess waiver offered by seven car hire companies (SIXT, Thrifty, Hertz, Avis, Budget and Europcar) against standalone insurance products from:
Car hire quotes are based on the cheapest car hire options from Sydney Airport.
The cover level selected for the car hirers is the level that includes excess reduction, windscreen and tyres, since this is covered by all the standalone products we included.
Travel insurance quotes are for one traveller aged 35 and the default policy excess level offered by the online quote.
*Excess for Avis and Budget can only be reduced to $838 online. Zero excess is available at the counter.
**Variable excess level increased to $6000 since the basic excess for most car hires (excluding SIXT) is over $5000.
Which hire car excess cover should you choose?
Standalone car rental excess cover
This is often the cheapest option for covering your car hire excess, especially for hire periods longer than one day. It also has the advantage of providing extra cover for items over and above what’s covered by your car hire contract.
Many of these items aren’t typically covered by the default excess waiver that comes with your rental car. Some of the extra items covered include:
headlights (covered by RentalCover)
key loss (covered by Prosura and RentalCover)
single vehicle accident (covered by Car Hire Excess and Prosura)
tyres (covered by Car Hire Excess, Prosura and RentalCover)
underbody (covered by Car Hire Excess, Prosura and RentalCover)
windscreen (covered by Car Hire Excess, Prosura and RentalCover).
*Quotes stated in the comparison table above are for $6000 excess.
Travel insurance
Both domestic and international travel insurance policies often contain cover for hire car excess. If you’re travelling overseas, travel insurance is essential, so if you already have good rental car excess cover in your travel insurance policy, you won’t need to shell out for additional cover.
If you’re travelling in Australia, domestic travel insurance can be useful for cancellation cover for high value trips, or protection of valuables like laptops and ski gear, as well as car hire excess cover.
There are a few traps to keep in mind when relying on the car hire excess cover included in your travel insurance.
If you only want cover for car hire excess, domestic travel insurance may be a good option for longer trips, but it can be an expensive option for short trips.
It’s charged on a per person basis, so if you have more than one driver, you’ll need insurance for each person.
The rental car excess cover in your travel insurance will generally only cover things that are already covered by the car rental company. So for example, if the agreement you have with the car rental company excludes cover for things like tyres and windscreens, then the travel insurance rental excess may not cover those items either.
We found some domestic travel insurance policies only cover car hire excess up to $5000 but the default excess for most car hire companies we looked at is above $5000.
Allianz
$6000
Cover-More
$5000
Fast Cover
$5000
RACV
Variable*
Travel Insurance Direct
$6000
Credit card travel insurance doesn’t usually cover domestic car hire, but if you’re travelling internationally, many offer cover for rental car excess. Depending on the policy, it may only cover the cardholder, and there may be conditions for accessing the cover, such as paying for the car rental on the card.
The car hire company’s excess waiver product
The main advantage of forking over the extra cash to the car hire company to lower or completely waive the excess is you only have to deal with one company. All the paperwork is done with the car hire company, and if you’ve paid to waive the excess altogether, then you don’t have to dig into your own pocket at all if you do have an accident.
The car hire company may be friendlier after you’ve handed over the extra cash, but if you look at the standard excess cover, you could be forgiven for thinking their business model is partly based on getting you to pay extra to bring these alarming excess amounts down.
For more details on the car hire excess cover available from car hire companies, check our car hire comparison.
It helps to ask the rental agency a few questions before you commit to anything.
What is my excess liability under the rental agreement?
Ask your rental agency how much the excess is for the vehicle you’re hiring. This will help you determine how much excess cover you need. Keep in mind that the excess for luxury vehicles and 4WDs is often higher than for standard vehicles.
Also ask if there are any situations where the excess may be higher, for example for younger drivers or single-vehicle accidents.
If you’re considering using a standalone car hire excess insurance product, ask them if they’ll cover any of the items that aren’t covered by your car rental agency.
What are the exclusions to the cover?
Even if you pay to reduce your excess to zero, either through the car hire company or an alternative provider, you’re unlikely to have waived all of your potential expenses. There are usually exclusions to the cover, which means there will be scenarios where you’ll have no cover at all (and it’s not always possible to buy cover for such scenarios).
Typical exclusions are damage to windscreens and tyres, overhead and underbody damage, and damage to headlights.
When aren’t I covered by my car hire excess insurance?
It’s fairly standard among rental agencies and alternative third-party providers to hold you fully liable for damages (i.e. beyond the standard excess amount), if it occurs as a result of breaching the contract or as a result of an excluded activity.
Common rental agreement breaches include:
disobeying road rules or being in contravention of any law
driving in specified remote areas or outside any town or city limits in Western Australia or the Northern Territory between dusk and dawn
driving on unsealed roads
an unauthorised person driving the vehicle
using the incorrect fuel type
driving above the snow line during ski season
driving under the influence of alcohol.
Your expenses in this case may not just be limited to damage done to the vehicle. You could also be held liable for expenses such as admin and towing fees. If the car is off the road as a result of damage, you may also be held liable for the loss of income to the rental agency while it’s being repaired.
If you’re unfortunate enough to have an accident in your rental vehicle, here are a few tips to keep in mind.
If there’s any damage that needs to be repaired, get an itemised receipt for the cost of repairs. If there is anything suspicious, challenge it. We’ve heard of cases where rental agencies have added on hundreds of dollars’ worth of extra ‘miscellaneous fees’ in addition to the repair costs. These charges were dropped when challenged.
While it goes against Australian Consumer Law guidelines, rental agencies sometimes charge the maximum damage excess fee without a repair quote, or place extra charges on your card without first giving you a chance to dispute them. If this happens, you can try seeking a chargeback through your credit card company.
Andy Kollmorgen is the Investigations editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses.
Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC), and at the Australian Financial Review. Andy is a former member of the NSW Fair Trading Advisory Council.
Andy has a Bachelor of Arts in English from New York University.
Find Andy on Twitter and LinkedIn.
Andy Kollmorgen is the Investigations editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses.
Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC), and at the Australian Financial Review. Andy is a former member of the NSW Fair Trading Advisory Council.
Andy has a Bachelor of Arts in English from New York University.
Find Andy on Twitter and LinkedIn.
Jodi Bird is the Managing Financial Content Editor at CHOICE. Previously at CHOICE, he worked as Travel project lead and as a Finance specialist.
Jodi has over 30 years experience in financial services, having worked with major banks such as CBA, Westpac and Credit Suisse. He enjoys breaking down complex consumer decisions into easy to understand steps and holding companies to account for failing their customers. He is regularly called upon for expert commentary by major broadcasters such as the ABC, SBS, and Channels 7, 9, and 10.
Jodi has a Bachelor of Commerce majoring in Economics from the University of Wollongong. He is RG146 compliance certified to provide general advice for General Insurance and is a Responsible Manager on CHOICE's Australian Financial Services License.
Find Jodi on LinkedIn.
Jodi Bird is the Managing Financial Content Editor at CHOICE. Previously at CHOICE, he worked as Travel project lead and as a Finance specialist.
Jodi has over 30 years experience in financial services, having worked with major banks such as CBA, Westpac and Credit Suisse. He enjoys breaking down complex consumer decisions into easy to understand steps and holding companies to account for failing their customers. He is regularly called upon for expert commentary by major broadcasters such as the ABC, SBS, and Channels 7, 9, and 10.
Jodi has a Bachelor of Commerce majoring in Economics from the University of Wollongong. He is RG146 compliance certified to provide general advice for General Insurance and is a Responsible Manager on CHOICE's Australian Financial Services License.
Find Jodi on LinkedIn.
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