Travel Insurance & Rental Vehicle Excess: Don’t Pay Twice

If you’re headed off overseas, it’s crazy not to consider taking out travel insurance. It’s not something you ever want to use. But should the unexpected happen, it can prevent a ruined holiday turning into a financial disaster. Especially should you or a family member require life-saving medical treatment overseas.

However, it is crazy to pay for your travel insurance twice. And that’s exactly what can happen if you take out travel insurance and then take out extra rental vehicle excess cover during your trip. For, as Canstar reveals, if you’ve already arranged comprehensive travel insurance, that policy usually also includes cover for any rental vehicles you hire during your trip.

Rental vehicle excess cover: Often excessive!

When you hire a rental vehicle, either domestically or overseas, you usually get the choice of how much insurance excess you want to pay in the event of an accident or vehicle theft. As with regular car insurance, the lower the excess, the higher the premium.

If your rental vehicle has a standard excess of $5000 and you have an accident, you’re liable for repairs up to $5000. But most rental companies give you the option of paying an extra premium to reduce your excess level, for example down to $1000, $500, or even $0.

However, many rental companies use this as an excuse to charge excessively for reduced damage liability cover. While often between 30%-50% of the car hire price, the cost of reducing the excess to $0 can sometimes be more than hiring the car itself.

And any amount is excessive if your travel insurance already has you covered.

Here, we feature only the winners of Canstar’s latest Outstanding Value Travel Insurance Awards. But most travel insurance policy providers offer some level of hire car cover.

Rental vehicle excess cover: What’s on offer?

Here’s what level of hire car excess cover each of our award winners offers in their overseas and domestic policies:

Rental vehicle excess cover: What to keep in mind

Of course, the level of insurance excess you can expected to pay when hiring a rental vehicle will depend on the car you hire. A luxury car is going to cost you more to rent and insure than a Toyota Corolla. But for most travellers, between $4500 and $10,000 will be more than enough insurance to cover the excess on most rental cars.

However, there are couple of important points to keep in mind:

• Ensure you know how much cover your travel insurance provides before you arrange your car hire, so you can make an informed decision and avoid paying twice for the same insurance.
• Always read your policy wording carefully, so you understand your level of cover. While you don’t want to pay twice for your travel/car hire insurance, you don’t want to find yourself underinsured should your travel plans go awry.
• Any insurance cover regarding hire cars will only cover you if you’re following all the local road regulations and driver licence rules. And always stick to the terms of your policy agreement.

Compare Travel Money Cards

Headed off overseas and looking for the best in money cards? Here’s a rundown of some of the most popular cards in New Zealand:

Provider	Key Features	Main Fees
	• 37 currencies • Spend in 150+ countries • Free physical and virtual card (delivery fees apply for physical card) • Use anywhere Visa is accepted	• No monthly fees (standard account) • Fee-free, instant transfers between Revolut users • Fee-free top ups for bank transfers and debit cards • Fee-free FX within market hours and plan allowance*
	• 9 Currencies • Earn Airpoints Dollars • Use wherever Mastercard is accepted • OneSmart app	• No load/reload fee for bank transfers • Monthly fee: NZD $1 (if funds in account)
	• 10 Currencies • Use wherever Mastercard is accepted • Cash Passport app	• No load/reload fee for bank transfers • No monthly fee
	• 9 Currencies • Use wherever Mastercard is accepted	• No load/reload fee for bank transfers • No monthly fee
	• 40+ Currencies • 2 free ATM withdrawals of up to NZ$350 per month	• Receive and add money to your Wise Account for free • Physical card $14 one-off fee
	• 9 Currencies • Use wherever Mastercard is accepted • Mastercard Priceless Cities benefits	• Free overseas ATM withdrawals • No load/reload fee for bank transfers • No monthly fee

The display order does not reflect any ranking or rating by Canstar. This information is not an endorsement by Canstar of travel money cards or any specific provider. Information correct as of 05/09/24. For full pricing details see individual providers’ websites. *Weekend fee will apply outside exchange market hours if it is made between Friday 5pm (New York time) and Sunday 6pm (New York time), which is a US based time zone

Compare Travel Money Cards

Rental vehicle excess cover: making a claim

When relying on travel insurance to cover your hire car excess, it’s important to understand that if your car does get damaged or stolen, the rental company, at point of hire, will hold you responsible for covering the insurance excess.

It will then be up to you to claim the cost from your travel insurance company, which involves paperwork. To ensure your claim is accepted, you’ll need to provide your insurer with:

• Your rental vehicle agreement
• An incident report
• A repair account
• An itemised list of the value of the damage
• Written notice from the rental company advising that you’re liable to pay the specified excess, deductible or damage liability fee

About the author of this page

This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.