Ultimate Guide To Rental Car Insurance

The good, the bad, and the ugly

You’ve heard this one. It’s the birthday of someone special. In your opportune hours of kindness and generosity, you planned to put them behind the wheel of a nice car and travel somewhere special, maybe even somewhere magical. You didn’t purchase rental car insurance.

Things didn’t go as planned.

It might have been an accidental dent on your door from a nearby car, or perhaps you were simply blamed for damage that you missed during the inspection when you were at peak excitement for the adventure ahead. Was it really your fault? You hand the keys back with a whopping $5000 hit to your credit card and a sour taste in your mouth as you utter…

Bastards! We’ll never do that again!

The leading causes of frustration, anxiety and financial distress when renting cars is damage and insurance. Whilst airport waiting times, car swapsies, and unfair rental terms come in succeeding places on the frustration-o-meter, nothing ruins a well-planned trip than an insurance claim.

Let me show you how to save some dollars and your sanity.

This article deals with rental car insurance for prestige cars. By prestige cars, I generally mean European cars that have a higher daily hire rate, cost more to repair, and typically come with a higher damage ‘excess’. Other cars also fit into these criteria. This guide may also be useful if you’re looking for a budget rental, however I’d recommend the more generic article by Choice as a good start.

Additionally, if you find this article glazes over certain ‘basic’ components of rental car insurance, I recommend reading the Choice article first. Instead of rehashing the same concepts as any other source you can find online, my goal is to go deep into the key considerations for insurance on prestige rental cars, and provide you with the tools to confidently hire from any rental company.

Required Reading: How Rental Car Insurance Works in Australia

When you rent a car in Australia you are by default 100% liable for all damage to the car, and any damage to other cars or property. The only liability that doesn’t sit with you is that of injuring another person, this is always covered by the compulsory CTP insurance.

But don’t stop reading. You don’t have the full story.

Providing you are not breaking the terms of the rental agreement (some terms you can bend, others you can’t), then your liability is limited to the amount of ‘excess’ noted on your rental agreement. This is sometimes called the ‘Accident Damages Excess’ (Hertz), or ‘Damage Liability Fee’ (Europcar), or ‘Excess Amount’ (Avis).

This limitation of liability down to the excess amount is what we call a Damage Liability Waiver.

But did you know that two of those rental companies apply your excess in an event basis? If you have both vehicle damage and also a claim from the shopping centre whose boom gate you totalled, you might just find yourself with paying the first $5,000 of both repairs.

The excess is generally considered as the most you will have to pay if any damage occurs. This is a myth — sometimes you will be up for much more. So the big questions are:

  • If something happens, how much could I be up for?
  • In what circumstances could this happen?
  • How can I minimise the chance of it happening?

This guide will address each of these questions and point out the differences between rental companies, insurance policies and simply good practices.

Buckle up for the academy of hacking rental car insurance.


Quick links

All definitions are at the bottom of this page. Just search (Ctrl + F or Cmd + F) in your browser to search through the definitions.


Going Commando
Declining insurance reduction (‘Damage Waiver’)

Reducing Rental Excess
First thing’s first. This ain’t no insurance, it simply means that you haven’t opted for any option to reduce your excess — your portion of any damage costs.

As this is the ‘default state’ prior to the customer service agent scaring you, pointing to horror stories, all in an attempt to sell you their damage cover policy, it’s worth considering what it means to ‘do nothing’. Or more succinctly, what happens when you say ‘No’?

What could you be up for?

  • Damage to the vehicle before you pick it up, if you haven’t marked it on the damage report.
  • Damage to the vehicle during your rental, e.g. a scratch or dent
  • Additional charges if you are involved in an accident, e.g. vehicle recovery, third party damage, loss of use etc.
  • Any exclusions (e.g. tyres), on top of the excess you pay for other damage.

Assuming you haven’t done anything that would void the rental agreement (more on that below).

Sounds scary? Let’s work through it together.

Nightmare During The Dream
Damage you missed during inspection

Rental Car Insurance Nightmare
As I have written about in my other reviews, I’ve always gone to extreme lengths to meticulously mark the damage report before I pick up the car. Typically, they will make you sign the damage report, agreeing there is no damage, before you see the car and can inspect it. This is wrong, but it’s purely logistical — do you really want to line up again?

Now it’s on you to ensure that you didn’t just sign away next month’s salary.

Despite already signing the damage report, it’s not until you drive away that you will be liable. Walk around the car and check the entire thing for damage. I’ll make it easier, here is your checklist:

  • Work top-down. This means you walk around the car five times, methodically working your way from roof to rims. Don’t try look up and down AND walk around a single time, you’ll miss stuff. It will bite you in the ass, and you’ll hate me for using less bold text in this article.
  • Start with checking the roof and particularly the edges of the roof were dents and scratches from trees or low parking spaces may occur. This is a critical step as you have unlimited liability with any rental company for roof damage. If there is a scratch or dent, you’re paying for it.
  • After the roof, check all windows and glass. It’s likely that you will be in a dark area (fluorescent lights are the worst), so use the torch function on your phone to shine a bright light on each section of the car. Most rental provides explicitly exclude window and glass damage by default. Finding this now will save you real dollars. Guaranteed.
  • When the windows and glass are done, inspect the primary panels — doors, wheel arches, bonnet, rear boot door. Ignore the front and rear bumpers at this stage. If you try to inspect too much in a single 360° inspection, you are much more likely to miss something.
  • Now check all the bumpers, including the front body kit in the centre and on the sides (think about gutter scrapes and parking bumps). Also check the rear bumper for remanence of other unscrupulous driver’s paintwork and parking damage from reversing into a pole.
  • Check under both driver’s side and passenger side doors for any damage caused by mounting gutters, and open both driver and passenger doors to check the edges to see if they have been slammed into another car. You will always find something here. Ensure it is marked. Underbody damage also has unlimited liability for every rental company. Just like the roof, you will pay every cent of damage found here after your rental.
  • Lastly, check the rims for scratches, and tyres for any side-wall damage. It’s easy for this to be missed, particularly with dirty wheels, and it’s also an easy one protect against using photos. Tyres and wheels are typically excluded by default by most rental companies. Don’t skimp on this.

Damage Check Warning

Roof, underbody, glass, wheels and tyres are not covered by your maximum excess. If there is damage here, you generally have unlimited liability. If not anything else, please thoroughly check these areas.
Read about my experience with the Hertz Audi A4 here.

Other tips for pickup

  • If the car is dirty, demand ask they wash it because you cannot see if there is damage. They’re unlikely to want to do this. In this case suggest they walk around touching the dirty paintwork to differentiate between dirt and damage. Or ask for another car. Whilst I don’t always do this, I typically do once I find some significant damage that they didn’t tell me about.
  • Take photos and video of any areas of concern. Video provides context. This will save your ass if you ever have an argument with the rental provider — you can count on them not having videos or photos before your rental. Particularly focus on those areas where you have no coverage (see red box above).
  • Take a photo of the odometer before you drive away. If they tell you it has 23,456km and it actually has 23,460, then you have grounds to argue that damage may have occurred from when they checked the car in till when you picked it up. The more evidence on your side, the better.

Whoops!
Damage during the rental

Car rental damage
You may be unfortunate and incur some damage during your rental. If it is minor, not involving another car or someone’s property, then take lots of photos so that you can protect yourself if they come back with an over-the-top repair fee. If your rental is for several days, you might want to drop into a vehicle repair shop for an estimation.

A friend of mine had some damage that was missed during the initial inspection on a Europcar VW Golf. The letter from Europcar stated:

“If no other parties were involved and if the damage costs are $500 or less no further action is required. If the damage exceeds $500 we will debit your selected payment type for our loss up to a total amount not exceeding the Damage Liability Fee (DLF) shown in your Rental Agreement.”

Two months later he was charged with $545.17 on his new credit card with a new expiry date. Interesting.

If there was ‘Third Party Loss’, e.g. you ran into somebody’s garage door or there was another car involved, then they will generally take the full excess from your credit card whilst the claim is being processed.

Here are where the rental companies differ:

  • Hertz and Avis will charge the full amount of your excess on your credit card when there is damage discovered. They will refund you the difference after the vehicle’s assessment, repair and invoice.
  • Europcar will make an estimate of the damage cost and only debit your card for this amount, they will charge more or refund when the full damage is assessed.
  • All companies will charge a ‘Claims administration fee’ for processing your claim. Hertz will charge $55 for a Single Vehicle Accident (no other car involved), and $220 when another car is involved. Europcar will charge $60.50, and Avis will charge an amount they find reasonable. I don’t particularly like the sound of ‘reasonable’.

For not charging the full excess immediately and lower administrative fees, Europcar wins.

Additional Charges

Each rental company differs in exactly what they will charge above and beyond the standard excess. For example with the Hertz Porsche Cayman, there are ‘Additional Terms’ you will be required to sign. The alarming condition is that if you do not return the vehicle to the place where you rented it, you will be charged a $2,000 admin recovery charge, the physical recovery cost, and loss of use. Let’s talk about what this means.

If you were to cause damage to the car where it wasn’t available for rental, let’s say you severely damaged a wheel from running into a gutter, you will be charged for a ‘Loss of Use’. Each company applies this in a different way.

  • Hertz uses 70% of the daily rate ($300 per day for the Porsche, therefore $210 per day).
  • Europcar uses the actual days multiplied by your daily rate on the agreement (not their standard rate).
  • Avis only charges this if you have breached the Rental Agreement, not for every accident. In this case they use the standard daily rate for as many days as they anticipate the car would have been rented out.

For ‘Loss of Use’, Avis wins outright as they only charge ‘Loss of Use’ if you have actually breached the agreement. However as with a lot of Avis’ terms, there could be a lot of wriggle-room for blowing out changes. Hertz and Europcar include it in the damage cost by default.

Also note that the Loss of Use applies for when the car is waiting to be repaired, being repaired, being replaced, and waiting to be returned. For a Prestige car, this may be a long time.

Read my insight into the Dirty Secrets of Accident Replacement Vehicles to understand this further.

Hertz is the only provider to add an additional fee for a Single Vehicle Accident (SVA). That is, when you have an accident (or otherwise cause damage) without another car involved, except for a parked car which is still considered a SVA, you will be liable for an additional $2420 on top of your Accident Damages Excess (AED).

For example, let’s say you back the car into a concrete pillar in a shopping centre, hit a wild animal, or drive into a hail storm. If you are driving an Audi Q7 and have an ADE of $5,500, you will actually have to pay the first $7,920 worth of damage.

That is, unless you were driving at night in a ‘Rural area’ and you hit an animal. In that case, pay up the $96,300 for a new car. Indeed, Hertz hands you unlimited liability if you hit an animal in a rural area after sunset.

C’mon Hertz, I don’t think that is fair.

There is a definition of ‘rural’ in the Hertz T’s and C’s. One hour out of Sydney or Melbourne and you’ll find a lot of ‘rural’. Be careful of this if you’re driving a Hertz car outside of capital cities.

Gotcha! Exclusions
The damage is on your hands

Car rental excess exclusions
Exclusions are the situations that are simply not covered by the rental company. Even if you purchased their most expensive Super Damage Waiver (rental excess reduction), you must still pay for each case of damage or loss.

Exclusions vary by company, but here are the most common:

  • Any damage to the windscreen, glass, or tyres (except for Avis, where windscreens are included as normal damage).
  • All damage to the roof or underbody.
  • Using the wrong fuel type.
  • Driving on unsealed roads, or above the ‘snow line’.
  • Admitting fault, or making any offers, promises or guarantees at the scene of an accident. The exception is if you are required to do so by law (e.g. to a police officer)
  • Leaving the scene of an accident without collecting the required information (generally defined as their crash report in your agreement).
  • Loss or damage to any accessories added to the vehicle (GPS, baby seats etc).

Snow and off-road

Although the definition of the ‘snow line’ varies, you generally can’t drive in the NSW or VIC snowy mountains during snow season (June to Oct) or in TAS where snow chains are required. If you do, you will have absolutely no insurance coverage, that is unlimited liability for any damages.

For gravel roads, only Avis accepts that a ‘metalled or gravel’ road is still acceptable. Europcar lets you purchase this coverage for 4WD vehicles. Don’t bother on these roads with Hertz.

In general, Avis is slightly more agreeable for light gravelled road use. If you hired a 4WD vehicle, there are no specific exclusions preventing you from driving this ‘off-road’ except for the guidance on their website in the FAQ. I wouldn’t push it. By contrast, don’t take an Avis car to the snow, you’ll have no insurance and full liability.

Here is the summary:

  • Light gravel/off-road? Try Avis first, then Europcar with ‘off road cover’. Ignore Hertz.
  • Snow? You must pay the additional for Snow cover. Go with Hertz and Europcar and ignore Avis.

Let’s talk about Snow Cover.

Europcar offers it for $38 per day in a Pajero 4X4 or $24 per day for a Mercedes-Benz C200, Volvo V40 or Renault Koleos. Why would Europcar charge more for a car that actually has a full 4WD? Ridiculous.

Hertz offers snow cover at $22 per day on all cars including the Prestige Collection, but not including the Adrenaline or Dream collections. Drop those dreams of taking the Porsche Cayman or Ford Mustang to the snowy mountains during winter (despite there is only a 150km limit per day and $1.00 per km over…)

An interesting note here is that vehicles booked through Hertz 24/7 don’t have any restrictions for sealed roads or above the snow line. There is a 350km limit per booking. Consider a Hertz 24/7 Audi Q5 from Sydney to the Snowy mountains for five days. With a 950km round trip plus another 100km of driving back and fourth around the mountains, you would be up for approximately 1150km.

  • Hertz 24/7 would cost $100 per day + $292.50 in extra KM = $792.5, or $158 per day
  • Hertz (traditional) would cost $108.98 per day without any discount codes + 5 x $22 for snow cover = $654.90, or $130.98 per day

So whilst the Hertz 24/7 comes in at $138 more in total, the insurance excess is capped at $2000, whereas traditional Hertz is $5500 per day + an additional single vehicle accident excess of $2420. It’s a consideration.

From a snow perspective, if Hertz 24/7 changed their distance limits to a per-day basis rather than rental-booking basis, then this might just be the ideal snow option. If you were to head to the countryside for a few days and you anticipate there being unsealed roads, it’s a no-brainer. No insurance with Hertz vs. $2000 excess with Hertz 24/7.

Mortgage The House
A breach of rental agreement

Breach of rental agreement
This is probably the worst thing that could happen with a rental car. The agreements aren’t necessarily the easiest documents to read and no one reads them entirely before driving away. This is not just the single page contract you sign, but it’s the 20+ page terms and conditions that comprise the rental agreement.

  • Hertz calls these ‘Full Responsibility Uses’. in 5(c) of their agreement.
  • Europcar simply refers to these cases as ‘No Cover’ and defines it as a ’severe breach of contract’.
  • Avis calls these ‘Full Cost’ items in 8.3 of their agreement.

Hertz and Avis differ from Europcar where they don’t classify a full-liability use as a breach of contract.

For Europcar, this is a double-whammy — a breach of agreement means that rental excess policies (see below) also won’t cover you the cost. You could be deemed entirely liable for all costs, with no protection. On the other hand, Hertz and Avis don’t necessarily state you are breaching the agreement, they simply say ‘you must always pay the cost’.

Therefore, Avis and Hertz look significantly more favourable in terms of capping your total liability. Should you choose to purchase secondary cover (next section), it should cover these items where they otherwise likely exclude them for a Europcar ‘breach of contract’. However keep in mind that Hertz also has more ‘Full Responsibility Use’ scenarios compared to Avis (that is, more situations where they provide no insurance).

There are certain exclusions that every company deems a breach of agreement. For example, street racing, driving when intoxicated, unauthorised drivers, or driving in certain areas of Australia.

Lastly, it’s worth noting that only Avis allows your spouse, employer or coworkers to drive the vehicle without explicitly being named on the policy. This is a huge win for convenience and piece of mind if you need someone else to take the wheel. Hertz and Europcar deem this a breach of agreement and therefore void insurance coverage for any unnamed driver. When time is money, this flexibility really helps.

Overall, Avis wins in this section for the clarity of their terms and conditions and leniency for authorised drivers.

Choosing Your Secondary Cover
Saving your ass (just in case)

Which rental car insurance suits you best?

Whilst you could accept the offer by the rental company to reduce the standard excess, it’s simply never the cheapest or most effective option. Although I could write you a colourful article showing you how it’s not competitive, I’ll move onto the real choices you need to make for your next rental.

You can confidently decline that insurance if you’ve chosen your option below.

Complimentary Credit Card Insurance

Many premium credit cards come with complimentary insurance. However, like all insurance policies, you need to read the PDS to understand the inclusions and exclusions. The consistent requirement is that you pay for the car rental using your credit card. Seems obvious.

Each of the cards listed below cover domestic rentals. The list of cards that cover international car rentals is much larger and typically combined with international travel insurance. You can always find the PDS for your credit card and search the word ‘rental’ to see what is offered.

American Express Platinum Charge

American Express Damage Waiver Insurance

The American Express Platinum Charge card is my go-to card. Sure, it comes with the whopping $1200 annual fee (the  Platinum Charge Business card is $1500) however the benefits add up if you plan on using the card a lot. One of the best benefits of the Amex Platinum Charge card is their outstanding insurance coverage.

Specifically for rental cars, you have $125,000 worth of coverage under their ‘Loss Damage Waiver Cover’. This isn’t just covering your Excess, but also includes all costs you are liable for in the case of any loss being incurred during your rental. Why is this so important?

As you read above (but I don’t blame you if you skimmed it), the rental companies have complex terms with lots of ‘gotchas’. What if you couldn’t get a new door for an Mercedes Benz E200 for 30 days? Europcar will charge you for a loss in revenue of more than $3000. If you’re covered by your Amex Platinum Charge card, they’ll pay this for you.

It’s not all rainbows and unicorns. Conditions do apply.

For example, the Amex insurance doesn’t apply if you breach the contract. This goes back to ensuring you avoid anything that could be deemed a breach of the contract. Damage sucks, but don’t let it be something that also isn’t covered under your backup insurance policy.

To this effect, Avis and Hertz may be well-matched rental providers for Amex Platinum cardholders because the ‘un excessed-ed’ items are not considered a breach of agreement. Here is the specific Amex term:

We will pay any amounts You are responsible for under the Rental Agreement, including the Deductible, if loss is incurred during a Covered Rental Trip, as a result of accidental damage, fire, vandalism, theft or loss of use of the Rental Vehicle. This will apply whether You are responsible or not for the accident.

There’s also one other condition that is the deal-breaker for this card from being my single catch-all rental insurance policy. It doesn’t cover rentals that are picked up and/or dropped off within 150km from my home. For someone like me who doesn’t own a car and hires cars as needed in their home city, it’s not going to work for you. By contrast, any travelling where I hop onto a plane and jump off into a car, it’s gold.

One final exclusion is that the car must have a replacement retail cost of under $125,000. Every car you can hire in Australia from the mainstream rental companies will fall under the limit, including the top-of-the-range Hertz Porsche Cayman, Europcar Mercedes-Benz E250 Cabriolet and Avis Mercedes-Benz E200.

Other things I love about the Amex Platinum Charge insurance are:

  • No excess component — they pay your full amount to the rental company.
  • Covers primary and supplementary card members (which means it covers three extra cardholders on a personal account and 99 extra cardholders on a business account).
  • Includes the cardmember’s partner and children if they are 21-24 and named on the rental agreement.

Case Study: Sean’s trip to the Italian Alps

Sean, a RideHacks reader, was taking a long-deserved break Skiing in Courmayeur. As public transport isn’t on-point up in the mountains, he grabbed a car at the Milan airport.

His intention was to simply drive to Courmayeur and leave the car locked up for five days while he enjoyed the powder, and then drop it off in Florence to end the trip. The car was cheap (about $130!) although in the final moments before dropping the car back in Florence, Sean clipped the wheel on the gutter. The car rental company inspected the car in great detail and found the scratch. They quoted €200 to fix it. Sean paid.

After reading this article three months after the incident, he realised he had insurance and submitted the claim form to Ace Insurance who operate the insurance programme for American Express. Two business days later they responded with an email asking for some clarifications (how it happened, requesting the itinerary to ensure he started and ended the trip in Australia, and why he was late to lodge). Sean responded and four business days later he received an email with the subject ‘Settlement Letter’. An SMS arrived the next day saying that the payment was processed and the payment hit his bank account three days later.

That was a total of two weeks (Friday 20th May till Friday 3rd June) for a complete settlement. Well done Amex!

Click here to check out the American Express Platinum Charge Card

ANZ Black Cards

ANZ Rental Insurance
At first glance, the ANZ policy seems like it could be useful. It covers $5,000 of vehicle insurance excess and $750 of vehicle return charges. With this being said, I’m still worried.

Three things concern me:

  • The vehicle must have comprehensive motor vehicle insurance for the period of hire.
  • In the ‘Master policy’ section, it explicitly states: We will not pay for the collision excess, where the full amount payable by you under the vehicle rental agreement for damage to the vehicle is more than the collision excess.
  • The following is an explicit exclusion: Any cover for your liability resulting out of your use of a mechanically propelled vehicle (e.g. motor vehicle or motor cycle)

Perhaps they have a fair assessment process, but this smells bad to me. Firstly, there is no proof in any rental agreement that the vehicle is comprehensively insured. In fact, it doesn’t matter whether the rental company self-insures or uses a comprehensive policy. Each rental agreement only deals with your maximum liability in different scenarios. You pay this whether you are at fault or not.

Secondly, it seems to be that if you are requested to pay more than the specified collision excess (e.g. If you have to pay the collision excess + wheel damage), they will pay nothing under this policy. Weird? Perhaps they mean that they won’t pay anything more than the excess, but this definitely is not clear and I would hate to get caught in the fine print.

And lastly, it seems that any Third Party Loss is excluded from the policy. Therefore, if you have an accident that damages someone else’s property, then you may be up for payment of those damages.

Sorry ANZ, this smells bad and there is too much wiggle room for you to throw the book at me and walk away.

Westpac Group Premium Cards

Westpac-Altitude-Platinum-American-Express
The following banks all use the same QBE complimentary credit card insurance policy:

  • St George
  • Westpac
  • Bank of South Australia
  • Bank of Melbourne

Although they offer a generous $5,500 coverage, the clause that worries me the most is:

the hiring agreement must incorporate the rental vehicle insurance

This is a similar clause to the ANZ policy. What does this really mean?

For Hertz and Europcar, searching for the word ‘Insurance’ in the rental agreements finds nothing telling you whether or not the car is insured. And even if you decided to purchase the excess reduction, it explicitly states

Rental Protection Services offered by Hertz is not an insurance policy.

Avis is the only company that explicitly uses the term ‘Avis Insurance Policy’ referring to a third party damage policy for any Authorised Driver. However, this isn’t the comprehensive policy that the card insurance is asking for you to prove.

Overall, I’m sure that you could use any of these cards as a backup if it’s already your main credit card. However, I wouldn’t be seeking any of them out exclusively for their rental excess coverage.

Commonwealth Bank Gold, Platinum and Diamond Cards

I’m including this as many people hole CBA cards from a long-standing relationship with the bank. Although I’m going to say very little about this policy. Why? It sucks. Here are the key reasons why:

  • You need to actually activate the policy before you travel to make it active.
  • The max excess cover is $2,250.
  • You must have purchased motor vehicle insurance or damage waiver from the rental company. (So why would you need second insurance if you spent $50 per day on the offered insurance?).
  • Doesn’t cover Tyres, Windscreens or any of the things that the rental company doesn’t cover.
  • They don’t pay for any admin charges or fees the rental company charges.

How is this useful CBA? It’s not, move on.

A Better Mousetrap
Rental Excess Insurance

Let’s say you don’t have the Amex Platinum Charge card with juicy benefits of actual rental vehicle coverage. Or like me, you rent cars within 150km from your home and need a ‘local’ policy option.

There are specific policies created for covering rental vehicle excess. These are typically sold on aggregator websites such as VroomVroomVroom and DriveNow. There are three policy creators we will touch on here:

  • TipCover, Hiccup and Allianz
  • CarHireExcess.com.au
  • RACV travel insurance
  • QBE Travel insurance sold on rentalcover.com

Allianz — TipCover and Hiccup rental car insurance

Allianz has created a policy called Rental Vehicle Excess Reduction and Luggage Insurance. This product is marketed and sold by TripCover, Hiccup and Allianz however they all refer to the same policy document.

For example, let’s consider TripCover. You can purchase the Allianz policy direct from their website, or you can purchase at the end of the booking process on an aggregator such as DriveNow. On the other hand you have Hiccup, who also lets you purchase directly on their website, or via the aggregator VroomVroomVroom.

These policies will pay up to $6,000 towards rental vehicle excess reduction on their ‘Plan B’ or ‘Plan D’ for drivers over 25 years old, and up to $4,000 for ‘Plan A’ or ‘Plan C’ for drivers over 21 years old. All plans are for a single journey, meaning that you need to purchase this policy each time you rent a vehicle. This policy includes coverage for all of the typically excluded items within the primary rental agreement — glass, tyres, roof and underbody.

Despite being cheaper and more comprehensive than the rental company, it still isn’t necessarily the cheapest option. But cheap may not be your ideal option either. The following are quoted from Tripcover:

  • $4,000 excess coverage costs $13.60 per day, or $9.30 per day if you are accept paying a $300 excess in the event of a claim.
  • $6,000 excess coverage costs $29.70 per day, or $22.19 per day if you accept paying a $300 excess in the event of a claim.

Assuming you are over 25 years old for less than 15 days rental.

Trip Cover

Based on the upper limit of $6,000, this really isn’t really going to cut it if you regularly hire prestige cars. An extra $100 for a four-day weekend isn’t really good value for money. Yet these policies are significantly better than accepting any reduction in excess from the rental company.

If you don’t rent cars very often and want to protect from anything going wrong, this is definitely the way to go. I suggest paying the lower premium amount and cop the $300 if anything happens.

Get a policy quote from Trip Cover here.

CarHireExcess.com.au

A new player has joined the market. CarHireExcess.com.au is backed by the UK Insurer Lloyds and offers a compelling product for both domestic and international coverage. What I liked most about the PDS is that it’s written with very simple wording and they cover up to $8,000.

This maximum limit makes a huge difference when renting out the Europcar Mercedes-Benz E-Class, Jaguar F-Pace or the Hertz Porsche Cayman or Audi R8.

Read their PDS here.

Get a quote here.

RentalCover.com

This policy is actually a domestic travel insurance policy issued by QBE. It provides $4,000 worth of excess and is similar to the ANZ card mentioned earlier in this article. The wording described in the FAQ on the RentalCover website is comprehensive and assuring, although there are still clauses in the QBE policy that worry me.

For example, they require the rental vehicle to have comprehensive motor vehicle insurance for the period of hire. As I mentioned above for the ANZ card, this is not declared by Hertz or Europcar and Avis explicitly says they don’t have Comprehensive Insurance.

Whilst the explainer text on the website is comforting, I would be reading customer feedback before trusting this policy. As of writing this guide, the feedback is generally quite positive.

RACV

This policy provides from $1,000 up to $8,000 of coverage for rental vehicle excess only. The policy wording is very brief:

We will pay You for any Rental Car insurance excess You become liable to pay as a result of damage to, or theft of, a Rental Car, whilst in Your control during the Journey.

…and excludes

We will not pay for: any damage or theft, arising from the operation of a Rental Car in violation of the terms of the rental agreement. And, any damage sustained to a Rental Car while it is being driven on an unsealed surface.

The policy doesn’t vary with the length of trip (1 to 365 days), but varies with the excess coverage. From $148 for $5,000 coverage and up to $217 for $8,000 coverage.

RACV confirmed that they only cover on a trip-basis, and don’t issue annual policies covering multiple trips. Therefore this becomes ideal if you need high coverage for many days. E.g. a 20 day trip in an Audi Q7 will cover you for damage excess ($5,500) and a single vehicle accident excess ($2,420) for $217, or $10.85 per day.

Domestic Travel Insurance Policies

Domestic travel insurance policies are an alternative way of covering your rental vehicle excess. There are many providers of such policies including Coles, Woolworths, Virgin Money, Commonwealth Bank, and Qantas. Who to choose?

For the purpose of comparison, I’m going to compare Good2Go, 1Cover, and WorldCare. If you want to compare your own choice, look at the key terms I’m analysing below and search them in your PDS.

WorldCare — Frequent Traveller Australia

Before the days of RideHacks, I was a much more scared of what might happen if I was to have a damage problem with a rental car. Maybe you’re feeling like this now. A domestic travel insurance policy was my lightbulb moment when I realised I could comfortably say no to all of those rental excess reductions and trust that I have a policy to cover my ass should anything go wrong.

I currently hold the ‘Plan E’ Frequent Traveller – Australia plan with WorldCare, an annual domestic travel insurance policy that covers all my domestic trips and especially my rentals. This was the best option for my circumstances before I had the Amex Platinum Charge card.

However as my Amex Platinum Charge policy explicitly excludes all rentals within 150km of my home, this WorldCare travel insurance policy is still used for 90% of my rentals. Luckily I haven’t needed to claim on this policy.

‘Plan E’ provides the following insurance coverage:

  • Unlimited coverage for Cancellation Fees and Lost Deposits
  • $150,000 of ‘Additional Expenses’
  • $50,000 accidental death
  • $10,000 luggage and personal effects
  • $2,000 travel delay expenses
  • $5 million personal liability
  • $6,000 Rental Vehicle Excess

There is a limitation of journey length: 37 days for leisure or 90 days for business travel.

At this point I suggest you read the PDS to get all of the terms and conditions from the source.

However, specific to this guide, here is what you need to know about Rental Vehicle Excess:

  • It will cover any rental where there is a rental agreement with the rental company. Similar to every other insurer, they add the clause ‘they must be a licensed rental company in Australia.’ However I have yet to see any official licensing program or list of who is and is not licensed in Australia. The key is that you have an agreement. Therefore GoGet and Hertz 24/7 rentals for more than a day are included, and DriveMyCar rentals are also included.
  • The coverage starts from the moment you leave home to pickup your car and ends when you arrive back home. You can also make multiple trips, so it wouldn’t matter if you were coming home for the nights and heading out the next day.
  • There is no coverage if you are violating the agreement, affected by drugs or alcohol or don’t have a driver’s license. Remember this when renting with Europcar.
  • They will also pay up to $1000 for the cost of returning the vehicle if you are injured during your trip and unable to drive.

As with any insurance policy, the claims process determines the value of the policy. The WorldCare Plan E (Australia annual policy) is quite brief and generally covers everything you would need in a rental policy. The limit of $6,000 excess is high enough to make a difference, although it does fall a bit short for the maximum liability on certain rentals.

What I love about the WorldCare policy is that there are no minimum distance limits from your home. For example, if you were hiring a Hertz 24/7 Audi Q5 for a day and didn’t travel any further than 50km from home, you would still be covered.

My annual policy cost me $139 for a year’s coverage. In trying to get a quote for this review I found that it was impossible for their quoting engine to give me an estimate. My price is presumably what they would quote for a young and healthy person.

With 30+ rentals per year, that’s less than $5 per rental. Even if you were to do 10 rental days per year (in a single or multiple rentals), then $13.90 per day is better than many other comparable policies.

There is a $100 excess when you make a claim on this policy. That is, you pay the first $100 of any claim.

Even after considering all options in writing this entire article, I’ll be renewing my policy for next year.

Click here to read the PDS

Good2Go Annual Multi Trip

The Multi-Trip policy by Good2Go only covers any ‘excess or deductible’ which you become legally liable to pay under your rental agreement. The default policy coverage is $4000 and this can be increased up to $6000 for an extra $60. There is the same benefit as WorldCare with vehicle return should you be unable to drive, however this is limited to $250.

What I love about Good2Go is their use of consistent easy-to-understand language. For example:

The Rental Vehicle must be rented from a recognised rental agency.
…for any excess or deductible which You become legally liable to pay under Your rental vehicle hiring agreement

This is so much easier to understand than other policies with their fancy lawyer-esque language.

Like many domestic travel insurance policies, your destination must be at least 250km from home. I would imagine that you will need to prove that you were heading somewhere at least this far away when you claim. However this doesn’t seem hard to work around. This contrasts the Amex Platinum Charge card policy that requires you to pick-up and drop-off the vehicle outside of 150km from your home address.

This isn’t just a domestic policy. It covers many other countries, notably Europe, but excludes the USA and Canada and a few others. Therefore, if you need a broader policy than Australia you can buy this one for $262 + $60 for the extra coverage.

There is a $100 excess when you make a claim on this policy. That is, you pay the first $100 of any claim.

1Cover — Frequent Traveller Domestic

This policy is similar to the WorldCare policy but limited to $5,000 excess. It comes in a bit higher at $199 for a policy year. There are additional conditions in the required documentation for making a claim:

  • rental agreement
  • incident report
  • itemised list of damage values
  • repair account
  • written demand from the rental company for the excess or liability fee

Whilst the policy reads quite fairly, it definitely has a greater amount of hurdles than WorldCover for a higher price and a bit less coverage.

A Word of Warning

Like any financial product, an insurance policy needs to be matched to your personal circumstances. Whilst this guide can’t necessarily recommend which policy is best for you, we can list the key considerations to check off before your make a final decision.

  • Do you have a big rental week coming up? Usually a single week locally can make a domestic travel insurance policy pay for itself and you have the rest of the year with free rental vehicle insurance.
  • Do you hire cars frequently but rarely in your local city (or within 150km?). You may want to consider the American Express Platinum Charge card, or Business card.
  • Do you intend on driving in areas where unsealed roads may occur or in the snow areas? If so, you can consider using Avis, or Europcar with the appropriate additional coverage (Snow or off-road cover), and then consider a domestic travel insurance policy as the destination is likely to be further away from your home.

Personally, I use a combination of my American Express Platinum Charge card, and my WorldCare frequent traveller domestic policy. If I was to have any damage claim in another state of Australia, I’d go for American Express first as my WorldCare coverage has an annual $6000 limit which I may need for a local rental.

Other Countries

Whilst it would be impossible to go into this level of detail for every country, it’s important to note that they are all very different. In particular, the USA typically leaves you with full liability or no liability, and nothing in between. Additionally, as with Canada, there is typically no Supplementary Liability Insurance (Third Party CTP) included by default. That means if you accidentally hit somebody, you may be up for their entire medical and property bills.

North America is different. It deserves its own post and will come in time. Just be warned before you make a booking.

The UK and Europe run the same system as we do in Australia, however if you are travelling from Australia your credit card insurance or purchased international insurance may cover you. Check the PDS before you set off.

Closing Thoughts

As with my other Ultimate Guides, this is a living document. I’ll add to it over time, correct the inevitable mistakes and keep it relevant for the changing landscape of car rentals.

I hope that you have found it useful, and can draw a few insights that will save you real dollars this year.

Please get in touch if you feel I need to explain any particular section in more detail or a correction needs to be made.

Good luck!

Guide last revised in June 2016

Car Rental Terminology Guide

Me, probably like you, and definitely like many, have found the jargon in car rental terms and conditions ridiculously confusing. There is a minefield of terminology and acronyms thrown around. It wouldn’t be so cynical of me to suggest that this is intentional. Let’s define it all here:

Excess

— the maximum amount that you are liable to pay towards damages, providing you have not broken the rental agreement.

Rental Agreement

 — both the document that outlines the vehicle condition and your rental charges, and the booklet of terms and conditions provided when you pick up the vehicle.

Accident Damages Excess (AED)

— Hertz’s version of Excess. However Hertz has an additional ‘Single Vehicle Accident’ fee which is applied on top of the AED.

Damage liability fee (DLF)

— Europcar’s version of Excess. The key difference is that Europcar works on an ‘event’ basis, where you are liable for paying the DLF for each separate event, which may include damage to your car, damage to someone else’s car and damage to third-party property.

Loss Damage Waiver (LDW)

— Avis’ version of Excess. Unlike Hertz and Europcar, Avis explicitly states you have full responsibility of the vehicle and automatically includes the LDW cover to reduce your liability to the Excess Amount. Like Europcar, Avis works on an ‘event’ basis. If you were to suffer hail damage one day and have an accident on the next day, you may be up for two occurrences of your excess.


Damage Waiver

— (not to be confused with Avis’ LDW) an option by the rental company to reduce your Excess for each and any of the events where the Excess would apply. Remember that it doesn’t always apply, e.g. with tyre damage and windscreen damage, and only applies if you have not broken the terms of agreement.

Super Damage Waiver

— the option to reduce your damage to less than the standard Damage Waiver. It sometimes includes additional items, e.g. tyre and glass damage, but only applies if you have not broken the terms of agreement.

Accident Excess Reduction (AER)

— Hertz’s version of the Damage Waiver. Excludes tyre and windscreen damage. AER costs $25.90 per day for Prestige cars. They also have ‘MAX’ cover (Super Damage Waiver) which reduces excess to $0 and includes tyres and windscreen.

Collision Damage Waiver (CDW)

— Europcar’s version of the Damage Waiver. Excludes windscreen, headlight, wheel and tyre damage. CDW costs $42.24 per day for Prestige cars, reducing the excess to $1,210. Europcar also has a Super Damage Waiver called ‘Super Collision Damage Waver’ which costs $54.31 per day for Prestige cars and reduces the excess to $605.

Excess Reduction (ER)

 — Avis’ version of the Damage Waiver. Don’t be confused with their LDW which is included in the rental cost. ER costs $26.40 per day, and there is no further reduction available.


Snow Line

 — generally the mountainous areas in NSW, VIC and TAS during winter where snow chains may be required. Each rental provider has their own definition for the location and the time of year this applies.

Snow Cover (SNO) 

— an option by Europcar and Hertz where they allow you to drive above the Snow Line during winter. If you will be driving in conditions where snow chains may be required, you will need to purchase this coverage or you will have deemed to have broken the terms of agreement and bear full liability for any damage to the car. Europcar charges $24.14 for standard and Prestige cars, and $38.40 for 4WD vehicles. Hertz charges flat $22 per day.

Unsealed Road Cover

 — only Europcar offers unsealed road cover at $18.10 per day limited to 4WD vehicles only. This doesn’t include All Wheel Drive cars. However this doesn’t allow the vehicle to be taken ‘Off Road’ or on private roads and only provides coverage on unsealed roads. Avis provides this same level of coverage free of charge.


Complimentary Credit Card Insurance

— insurance coverage that comes with many high-end credit cards that have a high annual fee. It is used as a benefit to sell the credit card, but usually had strong conditions for when claims can be made.

Rental Excess Insurance

— a specific insurance policy for covering rental vehicle excesses. They are typically comprehensive, but are priced on a per-rental basis instead of an annual basis.

Travel Insurance Policy

— a travel insurance policy for travelling domestically. Commonly used for recovering travel costs if a traveller gets sick, has an injury, or loses luggage. However this can be a cheaper way to ‘purchase’ a reduction in your rental vehicle excess on an annual basis.


Damage recovery fee

 — the fees for recovering a vehicle and taking it to a repair shop for assessment.

Insurance Exclusions

— the specific parts of the vehicle that are not covered under the Excess. E.g these are often Tyres and Glass of which if broken are paid for on top of any maximum excess you must pay.

Single Vehicle Accident

— an accident not involving another car. A parked car is still considered a Single Vehicle Accident. This is a term used by Hertz to push up your maximum liability when no other parties are involved and includes theft and weather damage.

Breach of contract

— when you break any clauses within the rental agreement. Each agreement has further clarifications on ‘Major Breach’, which means that any limit of your liability to the Excess amount is voided. Always look for the ‘Major breach’ terms.

Fair wear and tear

— although it’s never explicit, this refers to what would be an acceptable condition for the car to be returned and rented out to another customer. Some small scratches can be considered ‘fair wear and tear’ however you may be liable if the company considers it damage.

Third Party Loss

— any claim from another person or company for damage caused by you during your rental.