Losing the use of your car after it’s stolen or damaged in an accident can be frustrating. Luckily, if you are covered by either third-party fire and theft car insurance or comprehensive car insurance, your insurance provider may cover the cost of renting a car.
Keep in mind that some insurers may only offer rental car coverage as an add-on, especially if you are at fault for the accident. Plus, if the rental car is damaged while in your possession, your insurance policy may not cover repairs to the vehicle.
While damage to a rental car is typically considered the renter’s liability, you’ll need to check the car rental agreement to understand the specifics. Look for terms like “loss damage waiver” or “liability coverage”, which indicate that your liability for damages may be reduced to just the excess, which is the part of the cost of repairs you agree to pay out of pocket. This excess can be a significant expense, though there may be options available to help you reduce this excess.
Suppose you’ve rented the car through an agency recommended by your insurance provider after a theft or an accident. It is possible that your insurance policy already covers excess reduction as part of the car rental option. This is not the same as waiving the excess altogether - you’ll still need to pay some amount as excess.
Alternatively, if you’re paying for the rental and getting a reimbursement from your insurer, you can check if the credit card you’re using has a car rental excess insurance benefit. Such an insurance policy covers only the excess if you’ve abided by the rules stated in the rental car agreement.
Rental cars may only come with compulsory third-party insurance, which is part of their registration anywhere in Australia. If your rental car is covered by your comprehensive or third-party fire and theft car insurance, you may not need to buy separate car insurance for rental cars.
However, the rental agency may ask you to cover the car rental excess in the event of an accident, which can run into thousands of dollars if you don’t have car rental excess insurance. The car rental agency may offer you the option of reducing your excess for an additional fee, but this may sometimes make the rental cost unaffordable.
If you do take out separate car rental excess insurance, remember that as with many insurance policies, you may only be covered if you stick to the rental agreement terms. Consider checking what the agreement says about your liability as the person renting the car, as well about the exclusions or incidents that can be considered as a breach of the agreement.
If you have rented a car while on a trip that is covered by travel insurance, you may not need to spend extra cash on car rental excess insurance, as it may already be included in your existing coverage. Check if your travel insurance policy also covers car rental excess and what you need to do to make use of it.
It’s important to inspect the rental car and make sure there is no prior damage to the vehicle before you drive away. The rental agency may ask you to complete a damage report, which you should certainly consider. Damage to the roof, undercarriage, windscreens, or tyres are often part of a car rental agreement’s exclusions, so consider paying the most attention to those parts of the car. You may want to take photos or videos in case they’re needed as evidence. In addition, you could note down the car’s odometer reading to see if there’s any difference with the reading listed on the agreement.
If you’re paying for your car rental using a credit card, you can check if the card offers car rental excess insurance as a benefit. Note that this is not the same as full coverage rental car insurance. You’ll need to check whether the excess insurance policy restricts your choice of rental cars or is only valid for specific driving conditions. Such a policy can also have certain exclusions, and if that doesn’t work for your car rental, you may need to buy more suitable excess insurance from another provider.
This article was reviewed by Mark Bristow before it was published as part of RateCity's Fact Check process.
