Understanding Car Rental Insurance Excesses
Standard Australian car rental contracts require the Renter to assume full responsibility for any loss of, damage to, or damage caused by the rented vehicle during the rental period, irrespective of how such damage or loss occurred. The Renter is also responsible for any loss of rental opportunity whilst vehicles are being repaired.
Rental car companies usually provide a means by which customers can limit this open-ended liability to something usually below $5,000. With us and many other car rental companies this is set up on the basis that provided there is compliance with the rental terms and conditions, customers are automatically afforded the protection of the rental company's fleet insurance policy, subject to a standard insurance excess (or deductible as some people know the term) set by the rental company and usually stated as between $2,000 and $5,000, but the fine print can often disclose that you could unknowingly be liable for a lot more. Our standard insurance excess levels are $2,750 for normal cars and $3,750 for people movers and prestige vehicles, with higher excess levels for drivers under 25 and over 79 years of age.
It is worth noting that the majority of rental companies do not mention anything about their own fleet insurance policy, rather stating that they will indemnify you from claims above the relevant excess limit, rather than saying that you will have the benefit of their insurance policy. We are the only company that we have observed which actually provides the name of our inurance company and policy number, and when it comes to a significant liability to a third party, I would much prefer to have the backing of an insurance company with multi-million dollar coverage limits (ours is $40 million for any one claim), than the "we'll look after you" promise of a rental company with unknown capital resources.
It is imperative that renters become aware of the fine print relevant to their obligations and reduction options.
A good rule of thumb is to determine how difficult it is to find out from the car rental website just what you might be up for and what it will cost to reduce your overall liability (not just some of it). If the information is hard to find or is expressed in a confusing manner, move on to another rental company.
On our website, we have a full page explaining your insurance options, including externally arranged cover. We let you know what exclusions there are and we relate it all to the interlinked issue of Security Bonds with another dedicated page. Our complete Terms and Conditions are also shown on a specific page.
It is vitally important for you to understand the fine print for each and every car rental company that you are contemplating using.
A $3,750 standard insurance excess (or whatever acronym they may use) is not a $3,750 liability limit and a reduction to $350 is not a full reduction if you learn in the fine print that there is no cover for hail damage, either no cover or a higher excess for Single Vehicle Incidents, no cover or a higher excess for theft, no cover for interior damage and no cover for glass or tyre damage and that it is all "plus GST".
Think about what you might be up for if you hit an animal that suddenly runs in front of your car; someone bangs their face on the windscreen, breaks the screen and their nose and scatters blood all over the interior. (Single Vehicle Incident, glass damage, probably tyre damage, interior damage, plus GST) and even worse if it was a hail storm that drove the animal into your path.
With us, you could choose a Zero insurance liabilty or a maximum liability of $275 (plus a relatively small age excess for those under 25yrs or over 80yrs). We call our Zero excess package MaxiSafe Plus and it comes with a blame-free 24hr roadside service, giving you complete peace of mind for just $64.50 for a week and $5 per day thereafter. Our intermediate level reduction package (called Econosafe) is $49.50 for a week, then just $2.50 per day.
I suggest that you always read the fine print and don not be afraid to ask:
- What happens with a Single Vehicle Incident?
- What happens with Hail or Storm Damage?
- What happens with Theft?
- What happens with Interior Damage?
- What happens with Water Damage?
- What happens with Glass or Tyre Damage?
I know that I will never rent a car without knowing the answers to these questions.
It is also important for you to realise that you cannot create better cover by buying Car Rental Insurance Excess Liability insurance (however it is described), either as a stand-alone product (e.g. through RACV or your credit card) or as part of a travel insurance policy, than the cover that is available through the car rental company.
It may well be cheaper than the car rental company offer, but if the rental company excludes a certain item (as opposed to having a different liability limit); it will not be covered by your privately arranged protection. This is because the cover you buy is to indemnify you against your liability in respect of the insurance excess, not in respect of uninsured occurrences.
Rarely has the old adage of Buyer Beware been more appropriate than in the murky waters of many car rental insurance and liability arrangements.
Posted By Darryl Essington-Wilson on 7th November 2011
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