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What better way to get around and see the sights of your destination than by car? Unfortunately, no matter how far you are from home, accidents can and will still happen on the road, which can pose a tricky problem when you’ve hired the car you’re travelling in.

The good news is that many travel insurers can take care of the excess cost should something go wrong with you behind the hire car’s wheel, whether you’re in Australia or overseas. We’ll take you through the ins and outs of car hire excess cover within your travel insurance policy.

First off: What is a hire car excess?

Much like the insurance excess on your own car, a hire car excess is the amount you are charged by a car rental company if an accident or damage happens to your rental vehicle while you’re in possession of it. Its purpose is to help the rental company cover some of the costs of repairing or replacing the damaged vehicle.

There two different types of hire car excess depending on the circumstances. Some examples of these include:

  • Single vehicle accident. This excess applies when you have an accident in the car where no other vehicles were involved.
  • Multi-vehicle accident excess. Also known as an accidental damage excess, a multi-vehicle accident excess applies to accidents involving another vehicle.

a couple with travel insurance covering their car hire excess

Does travel insurance cover car hire excess?

Most comprehensive travel insurance policies (both domestic and international) cover car hire excess either automatically or for an additional premium.

If your policy does include car hire excess insurance, you don’t need to pay the excess reduction fee and you’ll be covered for the excess payment itself as well.

However, keep in mind that there’ll likely be a limit how much your travel insurer will pay towards the hire car excess and these limits can vary by insurer.

Some insurers may even offer cover for the transportation of your vehicle to its nearest rental depot if you’re not fit to do so. In these cases, you would typically need written communication from an attending medical advisor.

Nevertheless, these inclusions can vary between policies, so be sure to read the car rental excess insurance policy details in the Product Disclosure Statement (PDS).

It’s also important to know when driving in other countries whether you require an international driver’s licence (IDL) or just your Australian licence. If you don’t have one, most insurance companies won’t pay out any vehicle-related claims, so do your research before venturing into the unknown.

Frequently asked questions

What types of travel insurance cover hire car excess?

Various types of travel insurance can include hire car excess cover as standard, including single and multi-trip policies, while some policies may offer it as an optional extra instead. It pays to check the policy wording in the PDS of any insurance product – not just travel – before you buy so you can be sure of what the policy covers.

What is an excess reduction?

Car hire companies typically recommend you pay a car hire excess reduction fee, which is added to the cost of renting out the vehicle. The excess reduction fee lowers the cost of the excess (should you need to pay it) and is calculated in your daily rental fees.

So, if you were to rent a car and something happens to it (e.g. a large scratch, theft, accident), you would only have to pay a reduced excess (providing you comply with the terms of your rental agreement). Depending on the car rental company, paying excess reduction could mean the difference between paying thousands of dollars in excess or just a few hundred. Keep in mind, small scratches typically don’t lead to a claim as light damage falls under the rental company’s fair wear and tear policy (e.g. 2cm or less).

My rental company also offers excess insurance. Should I use theirs or my own travel insurance?

Some hire car companies may offer rental vehicle excess cover themselves.

Generally speaking, the better option may be to use comprehensive travel insurance with car hire excess included rather than paying for rental vehicle excess insurance or excess reduction fees with the rental company. This is because you’d likely be buying travel insurance anyway and you’ll be covered for more events, and this can save you needing to buy excess insurance, giving you better value for money.

Another thing to consider is that some kinds of damage might also be excluded from your cover. Examples of such exclusions include:

  • Windscreens
  • Damage to the roof
  • Damage to the underbody
  • Damage to the tyres
  • Damage caused by hitting animals at dawn or dusk
  • Travelling on unsealed roads
  • Any damage arising out of negligence.

The best thing for peace of mind is to weigh up which product may be right for your circumstances and budget.

How do I claim the hire car excess back from my insurer?

You may need to pay the rental car company excess upfront with your credit card at the rental desk before making a claim to your insurer. It’s always wise to contact your insurer to advise them of your intention to claim. Most insurers will allow you to claim through the online customer portal, via phone or by posting your claim. You will need to supply documentation (like invoices from the rental company) with your claim.

After submitting your claim and being assessed by your insurer, you will receive your reimbursement if your claim is accepted. Despite the cost that might come with an upfront payment, the potential savings and peace of mind that comes with knowing you’re covered could well be worth it.

Are there situations where I won’t be covered for my car hire excess under travel insurance?

As is the case with all types of insurance, there are scenarios where your hire car’s excess might not be covered by your insurer (whether your own travel policy or the rental company’s). These can include:

  • Disobeying road rules or contravening any law
  • Driving under the influence of alcohol or drugs
  • Using the incorrect fuel type
  • Driving on unsealed roads
  • Driving in prohibited areas and within prohibited times.

If your travel insurance covers hire car excess, you might find that you’re also restricted by the policy’s general exclusions.

Does my travel insurance cover the excess of other hired vehicles?

In general, your car hire excess cover through your travel insurance policy is only for cars, but some policies may also extend cover to:

  • Motorhomes
  • Mini-buses
  • Motorcycles
  • Four-wheel drives
  • Campervans

You might also find that there is usually a vehicle weight limit; for example, your insurer might not cover the excess for a hired vehicle over 4.5 tonnes.

Be sure to check your PDS if you want to hire a different kind of vehicle.

What is a collision damage waiver?

The collision damage waiver is the agreement form you sign with the hire car company where you agree to the terms and conditions of hiring the vehicle. As long as you follow the terms and conditions, you’ll be covered for:

  • Damage costs for the hire vehicle over the excess amount (you need to pay the excess)
  • Damages to other people’s property and vehicles
  • Injuries to other people

The conditions of the collision waiver mean you typically won’t be covered for:

  • Overhead or undercarriage damage
  • Tyre and wheel damage
  • Headlight damage
  • Windscreen damage
  • Breaches of the rental agreement
  • Single vehicle accidents
  • Water damage
  • Using the wrong fuel
  • Damage caused by an unauthorised driver
  • Driving in prohibited or restricted areas

It’s crucial to read through the full details of the waiver and understand your obligations while you hire the vehicle. Some things that aren’t covered, like windscreen damage, can be covered by travel insurance with windscreen excess cover.

Stephen Zeller, General Manager

Car hire excess tips from our travel insurance expert, Stephen Zeller

  1. If you’re planning to hire a car while travelling, it’s a good idea to take out a policy with vehicle excess cover included. Also consider adding additional cover for cruise or ski holidays if you are taking part in those activities.
  2. Purchase your travel insurance as soon as you book any plans or pay any deposits. Your cover starts from the day you purchase it, so depending on level of cover you have, if anything happens before you embark, you’ll be covered for any cancellations, delays or alterations that you make.
  3. If you plan to travel more than once throughout the year, you may find greater value in purchasing a multi-trip policy that covers all your trips for a full year (up to your specified maximum trip duration). That way, you only need to organise one policy for all your trips. Be sure to check the conditions of travel that qualify for multi-trip cover.
  4. Consider a higher excess on your travel insurance in exchange for a lower premium. Some insurers offer this option to allow you to customise your cover. Keep in mind that you’ll still need to afford this excess if you make a claim.

Get covered for your next trip

Whether you’re hiring a car at your next destination or not, travel insurance could provide you peace of mind.

Before you run off and buy the first policy you see, why not compare your options first? By comparing the deals on offer, you might find a policy that meets your needs for your upcoming trip and comes at a good price!

Our online travel insurance comparison service makes this step easy by hosting a range of policies in the one place – for free! Simply enter in a couple of details about your trip and away you go.

Ready to look for a better deal? It’s easy to compare with us.

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