The rental vehicle excess or in simple terms, your financial liability when you rent a hire car, is one of the biggest points of stress and confusion when renting a car in Australia.
The excess is your financial liability that you are required to pay should the hire car be in an accident or stolen while in your possession.
Purchasing protection or insurance for your rental liability when hiring a car is optional and not compulsory. It is your choice whether or not you choose to protect your risk. If you choose not to purchase protection, you will be liable to pay the out of pocket expense up to your rental vehicle excess amount (outlined in your rental agreement) with no financial relief should the car be damaged or stolen while in your possession. Commonly the rental vehicle excess ranges between $4,000 and $8,250 however it may be higher for prestige or specialty car types.
There are a number of ways to reduce your excess when hiring a rental car which include:
1. Rental Vehicle Excess Insurance
Allianz Australia have created a specific product to provide cover for the rental vehicle excess. The product provides comprehensive cover if the vehicle is damaged or stolen while in your possession and includes coverage for common damage exclusions including tyres, windscreens, underbody, overhead, single and multi vehicle accidents.
The insurance is independent to the car rental companies and can be purchased online any time before you collect your car (not available at the rental counter though). It is reimbursement insurance and works the same way as travel insurance. First of all the car repair / damage cost will be charged to your credit card then you would lodge a claim with Allianz Global Assistance for reimbursement up to your chosen benefit limit.
Plans range between $4,000 and $8,000 level of cover with nil excess. Coverage is available for drivers of all residencies travelling within Australia and also for Australian residents travelling globally. Full terms and conditions are here.
2. Excess Reduction
Excess reduction products are optional, not compulsory and are offered for sale by the car rental company representatives at the counter when you collect your hire car.
Excess reduction is a fee charged by car rental companies to reduce or remove your excess when hiring a rental car. The products are company specific and each car rental company offers 2 or 3 different levels of cover. Each product has different inclusions and exclusions so it's important to check the specifics when considering your protection options.
For example, the basis excess reduction coverage offered may reduce your excess (financial liability) from $4,000 to $1,500 however it may exclude windscreen, tyre, underbody or overhead damage. What this means is that if the vehicle is damaged or stolen while in your possession and the cause of damage is included in your chosen excess reduction product, you would be out of pocket for expenses up to $1,500 instead of $4,000.
However if the cause of vehicle damage is as a result of one of your chosen excess reduction product exclusions then you would be liable for the full damage repair cost even if it is above $1,500 (damage from an excluded cause commonly voids any benefit being derived from your chosen excess reduction product).
The benefit of Excess Reduction products is that any benefit that you receive is applied straight away and you do not have to wait for reimbursement. It's important to check what is and is not excluded when considering your coverage options. Learn more about car rental company protection products here.
3. Travel Insurance ( complimentary credit card travel insurance or specific journey/annual multi trip policy)
Travel insurance products often have a component of rental vehicle excess coverage however it's important to understand what is and is not included in such policies. Commonly the rental vehicle excess benefits include the rental vehicle excess only and not the excess exclusions set by the car rental companies. More detail about travel insurance coverage for the rental excess can be viewed here.