Rental car guide
Rental car companies can take you for a ride with hire car insurance and other hidden fees and charges.
The great Australian road trip
The flight arrived late, the kids are swinging on your arms, the warm body odour of the person behind is wafting into your personal space and the car rental guy hands you a 24-page 10,900-word hire agreement (thanks for that Hertz) and asks you to sign.
Are you going to read it first?
Car rental agreements and the Australian Consumer Law
That car hire agreement is governed by the laws about unfair contract terms that provide you with a range of protections under Australian Consumer Law (ACL). For example, the person at the counter shouldn't give you the idea that you've got more cover or less liability than you really have and then rely on you reading the fine print to find the exceptions.
This goes for car rental company websites too. In an Australian Competition and Consumer Commission (ACCC) investigation they found Europcar stated on their website that liability for damage would be no more than $3650, but the fine print of the rental agreement contained exceptions for overhead, underbody and water damage. For that doozy, among others such as holding consumers liable for damage regardless of whether they were at fault, Europcar copped a $100,000 fine from the Federal Court.
The legal action was taken against Europcar by the ACCC amid a wider review of the industry. Hertz also agreed to refund customers a reported $395,000 after charging for pre-existing damage to hire cars and not passing on discounts they received for repairs.
So no worries then, the ACL has you covered, right? Judging by the stories we've heard from some of our readers, Hertz and Europcar may have committed to cleaning up their act but other car rental companies still aren't too familiar with their obligations under the ACL.
To stay out of trouble we suggest familiarising yourself with rental company practices before you sign that contract and ask the customer service representative if there's any catches they haven't mentioned.
The hidden catches
Some of the catches regularly hidden in the fine print of the contract are:
Single Vehicle Accident fees
If you're in an accident where there's no other vehicle involved, you'll pay extra on top of the standard liability. But the Thrifty rental agreement also contains this provision: "...or if involved with another vehicle, the other vehicle or it's driver has not been identified to Thrifty, or at the time of incident the Thrifty vehicle was driving in reverse and other motor vehicle was station[a]ry."
Glass and tyres
Regularly excluded from the standard liability, you could be up for an extra fee or have no cover at all for damage to wheels, tyres, windscreen and other windows.
Underbody and overhead damage
You may find yourself fully liable for damage to the underbody or top of the vehicle.
Some contracts may charge an extra fee or not cover you for an accident involving an animal. The Hertz contract, for example, won't cover you if you hit an animal or have an accident while avoiding hitting an animal at night time in an area they define as rural.
Damage from flood, fire, storm, cyclone or other natural disasters may also incur extra costs on top of the standard liability.
To familiarise yourself with all the hidden fees, see car hire excess and hidden fees.
Fees, taxes, duties, levies, charges and fees again
Rental car companies love fees, especially hidden fees, but they can't state a price that is only part of the cost of hire unless they also display the total price at least as prominently.
For example, they can't state that the car hire costs $40 a day but then stick an unavoidable cost on top, like $10 for administration fees or taxes, unless they also advertise the minimum total amount of $50 just as prominently as they advertised the $40 before the fees.
In other words, if you see two prices advertised for a hire car then you can presume the higher price is the real one. And if you don't see another price advertised but they spring some extra compulsory costs on you, you should mention they're in breach of the ACL.
Note that this doesn't include other costs such as parking fees and toll fees or optional extras that you may choose to pay, like adding a GPS system or that doozy that rental car companies really love, excess reduction.
Excess reduction or collision damage waiver
Also referred to as loss damage waiver or one of the many acronyms invented in car hire contracts, this extra cost can seriously jack up the price of your car hire.
It's not actually insurance cover but a fee paid to the car rental company to release you from liability for damage, subject to the terms of the rental agreement, and it often excludes damage for the catches mentioned above.
The double insurance trick
Domestic travel insurance or excess reduction insurance can be a far cheaper alternative to forking out for the car rental company's excess reduction. You take out a policy with an external insurance company and if there's loss or damage to the vehicle then you pay the excess to the car rental company and claim reimbursement from the insurance company.
It does require you to have the basic insurance offered by the car rental company, which is usually included in the car hire, but check with the insurer because this can be a grey area.
To find the cheapest excess reduction insurance read car hire excess and hidden fees.
Top tips for renting a car
Before the hire
- Read the contract terms and conditions before you select a rental company.
- Inspect your vehicle carefully in the presence of a sales assistant before taking possession of your car. Make sure all pre-existing damage, no matter how minor, is documented.
- Photograph the vehicle at the beginning and end of hire. Try to time-stamp the photos and, if possible, get the sales assistant in the photos too.
- Ask for information about what to do in the event of a breakdown or accident.
- Find out whether you need to bring the vehicle back with a full tank and what is the charge per litre if you don't.
During the hire
- As you drive out of the car hire depot the first thing to check for, apart from a running motor, is the nearest petrol station so you can fill up on return without incurring the exorbitant fuel charges.
- If the vehicle breaks down during the rental or you have an accident, follow the company's procedures. Don't have it repaired without approval.
After the hire
- In our investigation of Avis and Hertz, we found fuel mark-ups approaching 300%. Fill up the vehicle as close to the drop-off point as possible and keep your receipt to avoid a refuelling fee.
- While you're filling up, hose down your vehicle before returning it so that any potential damage is visible.
- To avoid having to pay for someone else's misdeeds, aim to return your car during opening hours.
- Get a company representative to inspect the vehicle in your presence immediately upon return.
- If there is no damage, the ACCC suggests you ask for a written statement noting that the car was returned undamaged.
- Work out any disputes over damages on the spot.
- If you have a complaint, contact your local fair trading or consumer affairs office for advice or if it was an overseas hire check the advice from our sister organisations and consumer bodies.
Car hire alternatives
If you're hiring cars frequently in one area then car share schemes such as GoGet can be a viable option. Check out our comparison: car share schemes vs car hire.
Or if you're at the other end of the scale and need the convenience of a car but won't be using it too much, UberX could be an alternative. Check our trial of UberX versus taxis.