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A dive into car rental excess insurance – when you should take it up and cards that may help with coverage

Rental car horror stories – they have happened to you or someone you know, and they cause that pulsing anxiety when you return the keys of your Rental car after an enjoyable weekend away.

Car rental Insurance excess — it might just perhaps be the most confusing, misunderstood, and fun-destroying aspect of unique driving experiences during your travels. It’s about time you tried to figure out the basics of the car rental coverage game.

The aim of this guide is to provide you with an understanding of how rental excess works in Australia, how to consider your options to protect yourself on your next car rental, and specifically, give you more information about the insurance on your points-earning credit cards.

By the end you will be able to hire a car with the insight to know how to handle any situation that comes your way.

This article is a snippet from the Ultimate Guide to Car Rental Insurance originally posted on RideHacks.

  • What you should know about rental car insurance in Australia ↓
  • How to avoid getting caught out ↓
  • Insurance options to protect yourself ↓

What you should know about rental car insurance in Australia

In a nutshell, it doesn’t work like you think. The excess isn’t always the most that you will be required to pay if anything goes wrong, and the exclusions vary by rental company.

Rule #1: don’t focus on rental price until you have matched your rental provider to your driving experience.

This is the biggest mistake unsophisticated renters make. They think that the cheapest deal means the best deal. Saving a few hundred bucks might be a win for you, but being caught with a several-thousand-dollar debit to your credit card is going to put you in a really bad mood.

If damage is discovered, the first test is whether you are breaching the agreement. There are some rules you can break and all will be okay. Breaking other rules place the entire risk onto you, your credit card limit, and even your personal assets.

For example, if you drive the car interstate without telling the rental provider, it is typically a breach of agreement but not considered a serious breach. However if you drive above the snow line during winter, you have no insurance for damage to the vehicle, other vehicles or other property.

That’s a lot of risk on your shoulders.

If you have not breached the agreement, your maximum liability — that is the maximum you will have to pay — is limited to three components:

  • The excess stated on your rental agreement.
  • Any exclusions, e.g. tyres, windscreens, roof, underbody.
  • Any surcharges for a single vehicle accident (Hertz only).

Generally, you can reduce the first one by paying a huge amount to the rental provider, the second can be purchased as ‘optional cover’, and the third is just a slap in the face from Hertz. (And I actually like Hertz!)

For the full explanation, keep reading over @ RideHacks.

Now you know just enough, let’s talk about avoiding getting caught out.

The RideHacks Guide To Avoid Getting Caught Out

Providing you haven’t broken the terms of agreement, there are two ways your credit card might get hit with your full excess amount:

  • You missed existing damage upon picking up the vehicle.
  • There was damaged caused during your rental.

Putting the points-earning potential aside here. You definitely don’t want to be seeing these charges.

Remember that you typically pay the excess first, even if you are not at fault, and it is refunded to you upon the rental company reclaiming damage from the other party at fault. Also, Europcar will typically not charge you for small damage immediately and wait for the assessment. Whereas Hertz and Avis will take the full excess and refund the difference.

It’s also common that the damage found is actually on the vehicle prior to you picking it up. The only way to avoid this is a thorough inspection before driving away. We have written up a comprehensive guide showing you how to systematically check each rental car before your drive away.

Head over to RideHacks to save your copy

For completeness, you should also be aware of the two situations where you have unlimited liability — that is where you have no upper limit on how much they can demand from you:

  • Exclusions within the rental agreement
  • Damage caused during a breach of rental agreement

The primary difference between these two is that the former may be covered by a secondary rental insurance policy (see the next section) such as your complimentary credit card insurance, whereas a breach leaves you entirely liable for the full cost of the car, other cars and any other damaged caused. (Ouch!)

For example, let’s say your roof is damaged from being parked under a tree that breaks and falls during a storm. You generally will have to pay for the full damage cost of replacing that roof. Let’s say the damage cost is a painful $10,000.

By contrast, if you are driving the car in a camping area which is not on a sealed road (who camps next to a sealed road anyway?) and you’re not renting through Avis (who provides complimentary gravel road cover) or haven’t purchased the Europcar unsealed road protection, then the same tree damage will be deemed a breach of agreement due to being in an area only accessible via unsealed roads.

In the latter case, that $10,000 is entirely your bill to pay, no one has your back. In the former, you may be able to claim on a secondary rental insurance product providing they also don’t exclude unsealed roads. It’s worth reading the PDS before you buy any insurance policy.

The main exclusions across the major rental providers are:

  • Any damage to windscreen or tyres (except for Avis, where windscreens are included as normal damage).
  • All damage to the roof or undercarriage.
  • Using the wrong fuel type.
  • Driving on unsealed roads, or above the ‘snow line’.
  • Admitting fault, or making any offers, promises or guarantees at the scene of an accident. The exception is if you are required to do so by law (e.g. to a police officer).
  • Leaving the scene of an accident without collecting the required information (generally defined as their crash report in your agreement).
  • Loss or damage to any accessories added to the vehicle (GPS, baby seats etc).
    Scared? I’m sorry to be the bearer of bad news. On the bright side, there are several tangible ways you can protect yourself from these mishaps.

Let’s learn about protection.

3 Options To Protect Yourself From Car Rental Heartache

The focus of this piece is coverage when renting within Australia. Lot’s of travel insurance policies include rental coverage of different kinds for overseas rentals, and given the number of potential insurers, we’ll leave that alone (for now).

Broadly speaking, you have three options to protect yourself outside of accepting the excess reduction by the car rental company, which I would suggest you shouldn’t accept.

Rule # 2: think hard before you accept the additional excess reduction offered by the rental company in Australia.

At the least, you should go into that decision having read up on what the car rental coverage includes, and in addition, consider these following options:

  • Complimentary credit card insurance
  • Rental excess insurance
  • Domestic travel insurance

Complimentary credit card insurance

Whilst many credit cards come with complimentary international travel insurance that include rental vehicle excess insurance, only a handful come with domestic car rental insurance. In each case, the general requirement is that you pay for the rental using that specific credit card. Whislt this is the general requirement, there are many more terms and conditions than you may have thought.

American Express Charge Card

From all of the credit card offerings, the most interesting when it comes to car rental coverage is the American Express Platinum Charge Card (personal and business).

Find out more about the American Express Platinum Charge card

Find out more →

These cards come with a $1,200 and $1,500 annual fee respectively, but they also provide $125,000 worth of cover for any rental insurance claims providing:

  • You aren’t breaching the agreement.
  • You are picking up and dropping off the car > 150km from your place of residence.
  • The rental is less than thirty-one days.
  • The cardholder is named on the rental agreement.

The notable point here is that they will include paying out all costs incurred in the claim. This includes Single Vehicle Accidents, windscreen, wheel and Tyre damage — most of which is excluded by the other policies below.

All claims have a $0 excess but there is a limit to one accident and two claims per 365 day period.

Read the Amex Platinum Charge Card insurance PDS here
Section (O) Loss Damage Waiver Cover

Westpac Group, and some others: QBE Complimentary Policy

This is QBE policy code ‘QM7095 0615’ and is the same for each of these cards:

  • Amplify Signature
  • Vertigo Platinum
  • Platinum MasterCard
  • Visa Platinum Private Clients

Which are essentially the same names for the following Westpac-owned institutions:

  • Bank of Melbourne PDS
  • Bank SA PDS
  • St George PDS

And then you have the Westpac branded cards with the same policy PDS:

  • Westpac Black
  • Earth Platinum Plus
  • Altitude Platinum Plus and Qantas Platinum Plus (including their Private Bank equivalents)
  • Singapore Airlines Platinum
  • 55 Day Platinum Credit card
  • Altitude Platinum credit card

Find out more about Westpac Altitude Black →

Find out more →

If you hold, or plan to hold any of these cards, you will have the same process for dealing with QBE. There probably isn’t going to be any special treatment if you are a BankSA Platinum or Westpac Black holder.

Specifically for these cards, they will pay out up to $5,500 for any insurance excess or deductible of which you become legally liable to claim under the rental. However here are a few potential problems with this policy:

  • Their PDS states ‘the hiring agreement must incorporate the rental vehicle insurance’. Guess what? There is no where in the rental agreement that shows the vehicle you are hiring has any insurance. The ‘Damage Liability Waiver’ simply means if you don’t break the agreement, you are limited to the ‘Excess’ amount. It’s not an insurance policy. If QBE requested proof of insurance, I would take a guess that the rental provider won’t have it on hand and you may get stuck in limbo between the two companies.
  • They will only pay for the excess or deductible. That means that your Hertz ‘Single Vehicle Accident’ or Glass, Wheel and Tyre damage is likely not covered by this policy.

The excess for each claim is $250.

Commonwealth Bank Gold Platinum or Diamond

Commonwealth bank offers rental vehicle excess under their ‘Activated Policy’. This means that it actually won’t cover you unless you activate the policy before each trip you take.

The complimentary rental vehicle excess limit is only $2,250 and doesn’t include damage to windscreens, wheels, tyres and anything else not covered by the damage waiver. This includes a lot of items and isn’t worth pursuing.

Read the PDS here

ANZ Credit Cards

Similar to the Westpac cards, ANZ uses QBE to supply their complimentary credit card insurance. However this is a different policy (QM3210 1115). They also have a ‘Rental excess cover Master Policy’ which is referred to in the PDS.

These are the cards that the policy applies to:

  • ANZ Frequent Flyer Platinum
  • ANZ Rewards Platinum
  • ANZ Low Rate Platinum
  • ANZ Platinum
  • ANZ Frequent Flyer Black
  • ANZ Rewards Black

The Point Hacks guide to the ANZ Rewards cards is here, and the ANZ Qantas card guide is here.

Specifically for the rental vehicle excess cover, the wording states that they will reimburse for the amount of any collision excess that you have paid under any vehicle rental agreement.

Whilst it looks to be decent policy with a maximum limit of $5,000, the exclusions hold the most elusive details:

  • QBE will not pay ‘for the collision excess, where the full amount payable by you under the vehicle rental agreement for damage to the vehicle is more than the collision excess’.
    Does this mean they won’t pay anything if you are charged a Hertz Single Vehicle accident of $2420, your nominated excess is $5500 and the total damage is $8000? I’m not sure, but that’s how it reads.

There is a $350 excess for any claim under this policy and the required details in the event of a claim are elaborate, to be kind.

Overall, this policy looks like it could have been hopeful but may have more loopholes that could take you around the block a few times before you see your money back.

Rental excess insurance

Rental Excess Insurance is the better mousetrap instead of accepting the policy from the rental provider. There are a small number of providers in this space. They generally cover extra costs such as windscreen, wheels and tyres, and cost much less than accepting the coverage from the rental company. You can check out:

  • TripCover
  • Hiccup
  • RACV
  • (although this is technically a domestic travel insurance policy)

Domestic travel insurance

Domestic Travel Insurance is the final alternative. However, like credit cards and rental excess insurance, not all policies are created equal. I strongly recommend that you read the Product Disclosure Statement for each policy (and for any of the policies referenced in this guide) to ensure that it will work for you before purchasing.

A more detail guide to each of these options is outlined in the original RideHacks article

The Only 3 Questions You Must Answer Now

You’ve made it this far. Whilst not every question you might have has been answered, you should be able to create a simple strategy that makes future rentals a breeze. Start here.

Ask yourself these questions:

  • How often do I rent vehicles?
  • Where do I rent them?
  • What types of driving experiences do I want? E.g country roads, alpine mountains, sunny coastlines.

And now you should be armed with the info to select which rental car provider is best suited for your upcoming driving experiences, which insurance products will protect you from unlikely mishaps, and avoid getting caught out with a breach of rental agreement.

Head over to RideHacks to save your complimentary insurance checklist for your next rental.

The post A dive into car rental excess insurance – when you should take it up and cards that may help with coverage is from Point Hacks.

This post first appeared on Point Hacks - The Best Frequent Flyer Deals & Offers In Australia., please read the originial post: here

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A dive into car rental excess insurance – when you should take it up and cards that may help with coverage


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