Rental cars in Australia automatically come with a basic collision damage waiver (CDW) or loss damage waiver (LDW). This brings down your liability to a predetermined amount in case of damage or loss of the vehicle. However, even with such a waiver, the standard excess or deductible is still very high — usually between $4,000 and $4,560. To reduce your excess close to zero, you will have to pay an extra AU$40 – 65 per day. For zero-excess coverage, you need to pay even more. Worse, there are a lot of exclusions and hidden fees.
So what things are not covered by the rental agency’s car insurance? Well, a lot. Different companies have different policies but here are 5 things that are usually not covered.
Loss or damage to accessories
The car rental insurance does not include coverage for the loss or damage to baby seats, GPS, and other add-ons.
Using the wrong type of fuel
Before driving away with your car hire, make sure you know what kind of fuel the vehicle uses, as the rental firm will charge you a significant amount if you refill the tank with wrong fuel.
While your car rental excess insurance covers damage to most parts of the car, you will have to pay for accident-related fees, such as towing, roadside assistance, single-vehicle accident, and admin fees. Also, if repairing the damage will put the vehicle out of commission for a time, e.g. a wheel is severely damaged because you ran the car into a gutter, you will also be charged for “loss of use” while the vehicle is being repaired.
Damage to some car parts
Many car rental insurance agreements exclude damages to the vehicle’s roof, under body, tires, windshield, and glass. You are liable for damages to these parts, whether or not you were at fault.
This liability also includes preexisting damages to the vehicle that are not noted on the damage report, so make it a habit to thoroughly inspect the whole rental car during pick-up. Check the roof for dents and scratches caused by trees or other low-hanging objects. Check the under body, especially under the doors. Also pay special attention to any damage to the tires and wheels. These are easy to overlook, particularly if the wheels are dirty.
If you’re checking the car in an area with insufficient lighting or only lit by fluorescent lights, you can use your phone’s flashlight to illuminate the section you are looking at. Take photos or videos of any damage you find and make sure those damages are included in the rental agency’s damage report.
If you find that the car you’re getting is dirty, request the staff to wash the car first so that you can see any damages, or ask for another car.
Another tip is to take a photo of the odometer before leaving the rental agency with the vehicle. If the reading is different from what the staff said, there is room for you to argue that the damage might have happened sometime between when they checked in the car and when you collected it.
Damage due to breach of agreement
The car hire excess waiver won’t cover damages if you use the vehicle in a way that breaks your contract. What is considered acceptable and unacceptable vary among rental companies, but common breaches include:
- Driving on unsealed (gravel) roads
- Reckless or deliberate damage, e.g. not locking the car, breaking traffic laws, street racing, and driving under the influence
- Unauthorized driver
- Driving above the “snow line” — The definition of “snow line” is not fixed but in general, it means you will not have any insurance coverage if you drive in Tasmania when snow chains are needed or in the NSW or Victoria snowy mountains during snow season.
- Driving outside town or city limits in Western Australia or Northern Territory at night
- Admitting fault at the location of an accident
- Leaving the scene of an accident without following the accident protocol stated in your rental booklet, such as collecting the needed information for the crash report
So, if the rental car insurance offered by car hire agencies has all these exclusions, what is the better option? Instead of purchasing your policy from the rental desk, you can instead get your cover from memberships such as RACV, or from third-party vendors. Not only will the insurance policy be cheaper, the coverage will also be more comprehensive.
Although your liability is automatically capped when you rent vehicles in Australia, the standard excess remains high and there are far too many exclusions. Getting excess waiver insurance from an independent 3rd party makes a lot of sense, but accepting the policy offered by rental agencies may not be your best option, as there are other vendors that can provide you better coverage, and for a lower price.
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