If you're hiring a car on your holiday, I've got some awesome knowledge for you.
We've all heard of the hire car horrors and the countless customer complaints of the rental car companies hammering holidaymakers for hundreds of dollars in extra charges at the last minute. With our road trippin tips, you're sure to save a bundle.
One of the biggest extra charges your rental car company will hit you for is an excess insurance waiver. So what exactly is it?
Rental car excess explained
If you have car insurance in New Zealand, you'll be familiar with paying the first few hundred, possibly thousand dollars to your insurer in the event of a claim. The same thing applies when you hire a car, whether it's here in New Zealand or overseas. In the event of an accident, you will be liable to pay an agreed amount outlined in your rental vehicle agreement. This is usually around $3,000 to $5,000 for a standard vehicle. Rental car excess insurance (also known as collision damage waiver) is a fee that you pay to cover these costs if the car is accidentally damaged or stolen while in your care.
What could go wrong?
As you ponder the possibilities of holiday hire car hiccups; a tiny car park scrape, a traffic jam bump, a motorway mashup, or a swerve to avoid road kill; the mere thought of the potential costs can begin to burn holes in your pockets. So should you pay the hire car company an extra fee to reduce the excess cost in case the unthinkable becomes a reality.
Should you pay to reduce your excess?
No. Don't pay the hire man! Don't even fix a price!
If you have a comprehensive travel insurance policy, chances are, you are already covered for rental vehicle excess. So there is no need to pay twice. If you don't have a policy, buying a travel insurance policy could still be cheaper than paying the excess reduction options on offer by the rental car company.
Rental car companies will often try to sell you an extra charge per day to reduce your excess. Typical per day rates can be anywhere from $25 to $34 a day. By comparison, travel insurance rates are cheaper on a daily basis and will simultaneously cover you for additional expenses. That means more benefits for less money. Sounds like a no brainer to us!
Travel Insurance is your saviour
Rental vehicle excess is commonly a built-in benefit on both domestic and international travel insurance policies. If it doesn't come as standard with your comprehensive policy, it can usually be added to your travel insurance as an optional extra.
If you have an accident, your car hire company will charge your credit card the excess a then submit a claim to your travel insurer for reimbursement of the excess paid (or the cost of repairing the rental vehicle if it is cheaper). You will be required to provide a written report confirming you are liable to pay your hire car insurance excess.
Purchasing travel insurance that has 'rental vehicle excess' included or buying a standalone product can save you a bundle. It is important to note that the rental excess included in travel insurance is not rental vehicle insurance. This is usually included in the daily price of the hire car, or you can often arrange this insurance with your hire car company.
What does travel insurance car hire excess cover?
The rental vehicle excess cover that comes with travel insurance will cover you for the same benefits and scenarios as your hire car company (without the extortionate fees) outlined in your rental agreement. Additional benefits may include:
- Significant savings on the excess reduction cost. It’s free if you’re taking travel insurance out anyway.
- Cover for your out of pocket car hire expenses if you had to cancel your trip due to unforeseen circumstances.
- Provides cover for a whole range of other losses such as luggage or overseas medical cover.
- Cover for the cost of returning your car to the nearest depot if you are medically unfit to drive.
If you are involved in an incident, you would be reimbursed by your travel insurer for your rental vehicle excess or the cost of repairing the car if that works out to be cheaper. You will need to provide your travel insurer with a copy of the repair account and/or receipt showing the amount that you have been charged.
When would you be covered?
Your rental vehicle excess would be covered if:
- The rental vehicle is involved in a motor vehicle accident while you are driving.
- The car is damaged or stolen while in your custody.
You are not covered, and your claim would be denied if:
- You were in violation of your rental agreement.
- You were drunk or you (and your passengers) were under the influence of illicit substances.
- You did not hold the correct licence for the vehicle you're operating.
Reduce your car hire excess with travel insurance cover
Rental car companies will often try to sell you an extra charge to reduce your excess. Typical per-day rates can be anywhere from $25 to $34 a day. By comparison, travel insurance rates are cheaper on a daily basis and will simultaneously cover you for additional expenses- that means more value for less money. Sounds like a no brainer to us!
More cheap rental car excess options
An alternative to the travel insurance savings, is to buy rental vehicle excess insurance from a standalone company. These policies are designed specifically to cover you for any car rental excess you may become liable for. These policies usually include circumstances that are excluded by the rental company and travel insurance policies such as, damage to bumpers and trim, windscreen and tyres, single vehicle accidents and hitting the poor wildlife crossing the road. The main benefits of a standalone policy over one that comes with travel insurance are:
- Cover available for all drivers listed on rental agreement. So there is no need to purchase a policy for everyone. That's a bonus!
- Cover provided for motorhomes and campervans at no extra charge. These are often excluded elsewhere.
- There are no distance restrictions for domestic journeys which may apply to travel insurance.
- No price hikes if you have a history of pre-existing medical conditions.
Of course, a purpose built policy such as this doesn't come with all the travel trimmings of a travel insurance policy such as overseas medical, luggage and cancellation.
Across the Tasman, Australia is one of the most popular destinations for Kiwi travellers. New Zealanders visiting Australia can purchase standalone rental car excess policy if hiring a car downunder.
When hiring a car or buying travel insurance, taking the time to research the various rental vehicle options and comparing policies could make a wheel big difference!
Top Tip Takeaway
Say no to the rental car rip-offs. Kindly refuse the extra charges to 'reduce your rental car excess' at the hire car counter. There are bargains to be had elsewhere.