Example: Greg doesn't get travel insurance for a road trip
Greg and his wife Gwen decided to take a road trip from Auckland to Wellington for the long weekend. Instead of taking their boring old hatchback for the trip, they rented a luxury vehicle from a rental car company to add some fun to their 1-week journey.
A day before they left, Greg considered taking out a domestic travel insurance policy for $47. As well as cover for personal liability, cancellation fees and more, the policy would have provided $6,000 cover for rental vehicle insurance excess. Unfortunately, Greg forgot to purchase cover.
When Greg picked up the rental car, the rental company offered the option of purchasing a car rental excess reduction for $25 a day. The cost was $175 in total to reduce the excess payable in the case of an accident from $3,000 to $100. Greg was keen to pinch his pennies and chose not to purchase cover.
So when Greg failed to check his mirror and reversed into a Mini in the car park of a fast food restaurant, he knew he'd made a big mistake. Not only did he break a tail light on the rental, but Greg also dented the bumper and significantly scratched the paintwork. Without domestic travel insurance cover in place or even the rental company's excess reduction waiver, he had to pay the standard insurance excess of $3,000.
Cost of damage done to vehicle: $1,900
Insurance excess Greg must pay: $3,000
Cost of domestic travel insurance: $47
Amount Greg could have saved had he taken out cover: $2,953
* This is a fictional, but realistic, example.