No. If a rental vehicle is taken on a ferry for travel over bodies of water, the vehicle will be void of insurance during the ferry trip. Purchased excess reduction products will also be voided. Islands such as Kangaroo Island are considered to be "full responsibility" locations, meaning that you have to pay in full for all damage incurred.
There are some exceptions. Thrifty, Hertz and Europcar vehicles picked up in Adelaide can travel to Kangaroo Island, and with written authority Budget vehicles can be taken to Bruny Island. These exceptions are all subject to change, and all rentals are subject to local conditions.