There are rental car insurance alternatives that work out to be considerably less on a daily basis than those offered by car hire companies. Travel insurance usually contains cover for hire car excess, while some credit cards may also cover it. Companies such as RACV and Tripcover also offer specific car rental excess insurance.
On a seven-day trip to Melbourne for example, Tripcover charges $22 a day for $6,000 of cover to reduce both the standard and single vehicle excesses to nil – much less than Hertz’s $29 a day. The catch? You may have to pay the excess amount upfront to the car hire company and claim it back from the insurer.
Be sure you have enough to cover all the excesses your car hire company has in store. If you hire a prestige vehicle from Hertz, for example, there’s a standard excess of $5,500 and the single-vehicle excess can rise to $4,400 for a 4WD vehicle. So should you choose to splurge on the BMW X3, you’ll face an excess of $9,900 for a single vehicle accident.
Some insurance policies that promise to reduce your excess will only do so if you’re involved in an accident with another vehicle.
“There are two excesses – an accident damage excess of $3,500 [for example] if the hire car is in an accident with another car, and a single vehicle excess of $2,200 [for example] if you run into a wall, a branch falls on the car or you hit an animal,” a CHOICE member tells us.
“One would assume that if I accidentally hit a wall, with no other vehicle around, my excess would be $2,200. But no, the second excess is added to the first, meaning I need to cover myself for $5,700.” And unless you’re used to combing through the fine print, don’t expect car hire companies to inform you of the single vehicle accident excess upfront.
“Consultants for one rental company didn’t quote the single-accident excess – we only heard about it at the counter when we were about to pick up the car,” the member says. “In both cases it was extremely difficult to find any mention of the excess amount. How do you know if the excess was suddenly changed?” To avoid having to pay any excess at all, Hertz offers a maximum excess reduction that will cost you $29 a day for the above scenario – doubling the cost of the average hire car.
Saved by the mechanic
Do you even have to pay for car rental excess insurance? Caitlin and her boyfriend arranged car hire online to travel to an interstate music festival. They hadn’t been given much information about rental car insurance or excess charges, and when they arrived at the airport counter, among the many forms they were presented with was one with options about excess charges – three amounts, charged per day, each guaranteeing lower excess in case of damage or accident.
“We couldn’t afford the cover and drove away without any excess insurance at all,” says Caitlin. “We figured we’d just have to try not to scratch the thing!” Sure enough, a friend bumped into them while moving cars out of the festival campground, so Caitlin and her boyfriend spent the rest of the day hunting around for an open panel-beater on a public holiday.
They found someone who took 90 seconds to pop the panel back in place for the cost of a case of beer. But car hire contracts don’t allow unauthorised repairs, so Caitlin can consider herself lucky she wasn’t caught breaching the contract.
Industry traffic jam
The ACCC has been reviewing unfair contract terms in consultation with airline, telecommunications, fitness, and car hire industries. In March, the regulator outlined eight issues that arose from its findings, including terms that hold consumers liable for things that might ordinarily be outside their control. Most businesses took advantage of this review to align their contracts with the Australian Consumer Law, with the glaring exception of the car rental industry. As a result, the ACCC will be taking a closer look at enforcement action against the industry, with a Europcar
franchisee in Tasmania already having been fined $200,000 for overcharging customers for hire car repair costs.