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Rental car insurance
Reduce expensive excess charges when your rental car is stolen or damaged with rental car excess insurance.
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Fact checked
Rental car excess insurance is a type of insurance policy that will cover the excess charged by rental companies if the car is damaged or stolen.
That’s helpful because it reduces your out-of-pocket expenses. These excess amounts can sometimes be as much as $3,000 to $4,000. There are different options to suit all budgets so you can save yourself from unnecessary out-of-pocket expenses.
Looking for rental car insurance?
What vehicles are covered by rental car insurance?
Surprisingly, car rental excess insurance can actually cover most vehicles that includes standard cars, luxury cars, 4WDs, campervans and even motorcycles.
Limits to this include, the weight of a vehicle (for campervans, the vehicle needs to weigh less than 4.5 tonnes for most brands), the engine displacement of a motorcycle and driving conditions (e.g. icy and off-road). Always check directly with your insurer for exact specifications.
Cars
Luxury cars
4x4s
Campervans
Motorcycles
5 benefits of car hire excess insurance in New Zealand and overseas
It’s affordable
Getting standalone cover is usually much cheaper than cover purchased through a rental car company. On average, car rental excess insurance is three times cheaper than cover from the rental car companies.
Windscreens, tyres, roof and underbody can be included
Some providers can cover damage to the above, even if it’s excluded from your rental agreement.
Get other helpful inclusions
Some brands will also include cover for your luggage and personal effects, and returning your vehicle to the correct location if you get sick or injured and can’t return it yourself.
Covers all sorts of vehicles
Sedans, hatchbacks, SUVs and more – most policies cover an extensive range of vehicles as long as they weigh less than 4.5 tonnes.
Domestic and international policies available
Regardless of whether you’re travelling within New Zealand or overseas, there are standalone car rental excess policies available to suit your needs.
Is it worth it? Yes
For some perspective, here are the minimum excesses charged by major rental companies in New Zealand. These charges are based on standard 2WD vehicles, that means that the excess amount can increase if you’re renting a more expensive vehicle. If you decide not to take out any type of rental car excess cover, you risk having to pay these amounts if the rental car is damaged or stolen.
Alamo – $2,875
Avis – $3,450
Hertz – $3,450
Jucy – $3,000
Omega – $2,500
Thrifty – $3,000
What options do I have?
Excess reduction cover straight from rental company
Pros. This is the most convenient option if you haven’t already got cover.
Cons. Usually the most expensive way to get cover for car rental excess.
Standalone car rental excess insurance policy
Pros. Affordable and flexible option that can give you additional benefits.
Cons. You’ll need to take out cover before picking up the rental car.
Travel insurance including car rental excess insurance
Pros. Affordable option since it can be automatically included in some policies.
Cons. Sometimes not an option if you’re hiring a car in your home city.
What’s not covered by car rental excess insurance?
When choosing a policy, be mindful and make sure you understand your agreement. There can be big differences between policies so it’s relatively safe to say that you get what you pay for.
Car rental excess insurance policies are designed to cover an excess charged by a third party. So if the damage caused to your rental car is not approved as an insurance claim, an excess isn’t charged and you won’t be able to use your car rental excess insurance policy.
There are some situations and events when car rental excess insurance will not provide any cover such as:
You use the rental vehicle in breach of your rental agreement
You use your rental vehicle without a valid licence
Your claim is for administrative fees charged by the rental company (unless this is included in your policy)
You were driving the rental car while under the influence of drugs or alcohol
You failed to act sensibly to protect the vehicle or your property
You did not do everything possible to reduce or minimise your loss
You travel against medical advice
Your claim arises due to a pre-existing medical condition
Your claim is for consequential loss of any kind, for example loss of enjoyment
Your claim arises due to mental illness, depression, anxiety or stress
Your claim arises because you participate in any race, speed or time trial
Your claim arises from a government authority confiscating, detaining or destroying anything
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.
Frequently asked questions
Yes, some travel insurance policies can cover you for rental car excess insurance, but it doesn’t cover your rental car as such.
When you hire a car, the rental company will usually include a loss damage waiver (LDW) or collision damage waiver (CDW) in the price of the hire. This will generally cover the car if you get into an accident or cause damage to the car. While you won’t have to pay for the repair directly, the rental company will charge you an excess amount which can usually vary from $0 to $8,000. This is where travel insurance can help.
If your travel insurance policy includes car rental excess insurance, then your insurer will cover the excess amount charged by the rental company so that you don’t have to pay for it, as long as your limit is high enough.
An excess is a fixed amount charged to pay for losses/damage. The renter agrees to this amount in the rental agreement and it’s usually an out-of-pocket expense if the renter hasn’t taken out insurance against it. Learn more about insurance excess.
Not really, both of them protect you from out-of-pocket expenses which is the most important thing. Rental car insurance will usually cover you for direct losses to the car, whereas car rental excess insurance covers you for the excess amount charged by the rental company for the losses.
Car rental insurance isn’t usually compulsory but rules can vary between countries. At the very least, you will usually need a collision damage waiver or loss damage waiver that is the most basic form of insurance when renting a car.
In most cases, no. You can buy rental car excess insurance at any time up until the point of pick up.
Yes, as an overseas visitor you may be eligible for cover with certain brands provided you have the right driving permits and stick to the rental agreement of your car hire.
If you purchase an annual multi-trip policy for domestic or international travel, it will provide car rental excess cover for all trips you take during a 12-month period.
No. If you hire two separate vehicles you will be liable for two sets of excess fees from your car rental company, so you will need to purchase separate policies. However, travel insurance can provide cover that applies to any vehicles you hire throughout your trip.
Most insurers will cover any vehicle that has been rented from a licensed motor vehicle rental company, up to a certain weight limit. This includes:
Cars. Sedans, hatchbacks, coupes, station wagons, SUVs.
Four-wheel drives. 4×4 vehicles.
Campervans and motorhomes. Usually up to 4.5 tonnes.
Minibuses. Usually up to a 12-seater.
Make sure you read the PDS carefully to see if your vehicle type is automatically covered, as some insurers may require you to take out a separate policy for larger vehicles like campervans, motorhomes and minibuses.
Commercial vehicles of any kind will not be covered by a standard rental excess insurance policy.
Driving on sealed roads only is a common condition on car rental contracts, and car rental excess insurance policies will not provide any cover if you breach your rental contract. Check the contract and your insurance PDS for more information.
Yes. This feature is available on some credit cards.
Yes. In New Zealand, all car rental companies are legally required to have standard insurance in place.
The rental company’s basic level of cover will automatically set your liability in the event of damage to the vehicle at a certain level, typically between $3,000 to $4,000. This is the excess you will need to pay, but it can also be known by names such as collision damage waiver, loss damage waiver and damage liability fee.
If you want to reduce this excess, you can purchase cover through the rental agency or one of the other options.
Reading the fine print of rental car insurance cover may be a boring task but it’s also an important one. Giving the terms and conditions a quick read is an easy way to pick up on any crucial distinctions that can make a huge difference to your level of cover.
For example, some insurance policies will only reduce your rental excess if your car is involved in an accident with another vehicle. This is called the accidental damage excess. However, many people are unaware that if they are involved in a single-vehicle accident, such as scraping the car on a wall or maybe hitting a possum, a separate excess will apply on top of the accidental damage excess. This second charge is the single-vehicle accident excess, and can end up adding another couple of thousand dollars to your overall bill.
Most hire car companies will not make you aware of the single vehicle accident excess when you take out cover. Read the fine print of any rental agreement before signing it to familiarise yourself with exactly how many excesses each policy contains, and in which situations they apply.
Most comprehensive travel insurance policies, whether for domestic or international trips, will include car rental excess insurance as a built-in feature. Those policies that don’t include it as standard will usually offer it as an extra-cost option.
So what’s the difference between standalone car rental excess insurance and comprehensive travel insurance and which option is the best choice for you? Check out the comparison table below to help you decide.
Standalone car rental excess insurance
Comprehensive travel insurance
What is it designed to do?
Cover car rentals only.
Cover a broad range of travel risks and events.
How much excess cover is available?
Can cover up to $8,000.
Cover usually limited to $5,000.
What damage is covered?
Covers an extensive range of damage.
May exclude costs such as damage to bumpers, interior trims, windscreens, tyres and single vehicle accidents.
Does it cover anything else?
Yes. Luggage and personal effects.
Yes.
Overseas medical expenses
Trip cancellation and interruption costs
Lost and stolen luggage
Travel delay
Luggage delay
Many other benefits
How much does it cost?
Varies depending on insurance provider, length of car hire, standard excess payable and other factors.
Varies depending on many factors including length of journey, where you’re going, number and age of travellers covered etc.
Why you should consider it
Designed specifically for rental cars and offers a higher level of cover for rental excess than travel insurance.
Offers cover for damage caused by a broad range of events.
Covers all drivers listed on the car rental agreement.
No distance restrictions applied to domestic journeys.
Provides crucial cover for car rental excess.
Also covers many other expenses that could ruin your holiday.
Can give you greater peace of mind when you travel.
If you think you could benefit from the extensive additional cover provided by comprehensive travel insurance, you should definitely consider buying it instead of standalone rental excess insurance. Travel insurance includes a long list of benefits for travellers, including cover for:
Overseas emergency medical expenses
Cancellation costs when unexpected circumstances force you to cancel your trip
Lost, stolen and damaged luggage and personal belongings
Travel delays and delayed or misplaced luggage
Theft of cash
Trip interruption
Personal liability for causing death or bodily injury to someone else
Particularly if you’re planning an overseas holiday, travel insurance is simply an expense you must consider. Unless you’re travelling to a country with which New Zealand has a Reciprocal Health Care Agreement, travel insurance is the only thing standing between you and potentially massive medical bills.
If you’re looking for peace of mind and protection for a broad range of risks and events, travel insurance may very well be the best choice.
If you purchase excess reduction cover from a car rental company, you’ll simply have the reduced excess charged to your credit card after returning the vehicle. However, if you’re covered by domestic travel insurance or standalone rental excess cover, you’ll need to pay any excess you’re charged out of your own pocket and then lodge a claim with the insurer to be reimbursed.
The process for lodging a claim will vary depending on the insurer, but you will usually need to follow a few simple steps:
Download and complete a claim form.
Provide copies of any supporting documentation requested by the insurer, such as police reports, repair invoices and copies of the rental agreement.
Submit your completed claim form and supporting documents by post or email.
Your claim will then be processed and paid as soon as possible. Please note that the benefit you receive may not cover admin and/or transaction fees charged by the rental company.
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It’s affordable
It’s affordable
Windscreens, tyres, roof and underbody can be included
Get other helpful inclusions
Covers all sorts of vehicles
Domestic and international policies available
