What is travel insurance excess?
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Even the most seasoned travellers scratch their heads when it comes to car hire excess and if it is included within travel insurance policies. In this article, you will discover what is involved in travel insurance excess and if travel insurance covers car hire excess. You will also discover how to get better value for money and greater protection out of your policy for your next adventure.
While travel insurance is designed to cover unforeseen events like lost or stolen belongings, medical emergencies, and travel cancellations, excess in travel insurance refers to the amount you have agreed to pay towards claims you might make on your policy. Your insurer then foots the claim’s remaining amount to cover up to the limit of the benefit.
Whether you’re taking a road trip along the Great Ocean Road or planning to drive through Scotland’s misty green hills, there is the unfortunate chance your car may be stolen, damaged, or involved in a collision. Car hire excess refers to the amount you are charged by a rental company if your rented car is involved in these situations.
Car hire companies typically charge daily rental fees with basic cover add-ons known as waivers. Different rental companies refer to these waivers as damage liability fees, loss damage waivers, or accident damage fees. When you are charged for a waiver, you are essentially limiting the amount of excess you would need to pay if your rental car was damaged or stolen in your possession.
For example, if you were to rent a car and become involved in a collision with another vehicle, you may be liable to pay the appropriate excess. If you’ve chosen to pay for a waiver fee as a daily add-on to your rental fee, you may be able to reduce the amount of excess you would need to pay in the respective scenario – providing you comply with the terms of your rental agreement. These waivers limit the car hirer’s liability by reducing the excess payable if there is an event/claim.
Many comprehensive travel insurance policies cover car hire excess. These policies can cover you for the amount of car insurance excess charged by your rental company for a damaged or stolen vehicle, or one involved in a collision. There will be a policy limit however; for example, they could be as low as $2,000 or they could be $5,000 or even higher. On top of this, some insurers may even offer cover of transportation of your vehicle to its nearest rental depot if you are not medically fit to do so. In these cases, written communication from your attending medical advisor is typically required. These inclusions can vary between policies.
It may seem convenient to use a rental car company’s car excess insurance, especially when you’re eager to get started on your holiday. This option, however, isn’t always viable for your holiday pocket, as some car rental companies’ excess fees can be exorbitant. Choice revealed in 2015 that buying rental car insurance can see you paying up to around 490% more than purchasing coverage under a basic travel insurance policy.
Moreover, certain waivers you may pay for, like a collision damage waiver, may not cover certain scenarios. Some damage exclusions may include:
If you were to experience any of these exclusions while travelling, your excess would not be reduced.
Your peace of mind may become quite expensive with rental companies’ reduction fees. While it may sound beneficial to limit the amount of excess you would be required to pay should the unexpected happen, it may not viable for longer travel periods.
Domestic travel insurance can be a much cheaper alternative to forking out a car rental company’s excess reduction fees, especially if you’re going on a long road trip in Australia. On top of this, international travel insurance has you covered against other unfortunate scenarios, like loss of possessions and falling ill while travelling overseas.
It is important to note that most insurers will not cover your excess if you are in breach of your car rental agreement. Certain scenarios that can break many rental agreements include:
If terms like these are breached, your liability can go beyond the rental car company’s standard excess amounts.
When making a claim to your travel insurer, be aware that you will need to pay the rental car company excess upfront. You would then submit your claim with supporting documents and, once assessed by your insurer, your excess would be reimbursed. This may seem like a hassle for some, but the potential savings and added peace of mind is often worth the cost.
While planning a trip in Australia or overseas can be exciting, it can also become timely and costly. Understand and find the right type of travel insurance and car excess coverage by comparing travelling insurance policies. Happy planning!
We do not compare all travel insurers or products in the market. Any advice given above is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances, and before you make any decision about whether to purchase a product, you should read the PDS for that product.
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