One of the most common issues raised with us is that of Excess Car Insurance.
How much am I liable for in the event of an accident?
How can I reduce my liability and how much will that cost?
Does my travel insurance cover me?
To answer these questions and explain how excess car insurance works the DriveNow Res team put together a quick guide.
What insurance comes as standard with a Rental Car?
All car hire companies supply vehicles fully insured with a standard amount that you are liable for in the event of an accident or damage to the vehicle whilst in your possesion. This amount varies between companies and type of rental vehicle. Small and Standard size vehicles attract an excess of around $3300 whilst for luxury and 4 wheel drive rentals this figure can be as high as $5700.
If you choose not to take out an excess insurance reduction option then the standard excess amount is charged to your credit card. This is reimbursed when you drop off the vehicle once it has been checked for any damage.
How does Excess insurance work?
In a perfect world and in the case of the vast majority of car rentals there is no need to fall back upon insurance. However here’s what happens where that perfect world is not so perfect.
If the rental vehicle is damaged whilst in your possesion irrespective of who was responsible the rental company will retain the full excess insurance amount. Once the cost of repairs has been established and should those costs be below the excess amount the rental company will reimburse your credit card with the difference. One thing worth remembering is that the time between your rental drop off and the repairs being completed may fall beyond your credit card billing cycle so you may have to pay for the full excess insurance amount and wait to be reimbursed by the rental company.
As you can see standard excess can be painful in the event of an accident.
So, What are Excess Reduction Options?
There are ways of reducing this exposure and potential pain. Some commentators call excess insurance options the hidden cost of car rental. This is slightly unfair on the rental companies (and yes we may be a little biased) given they are renting their fleet out to different drivers every day and in order to keep their costs competitive they need to optimise their insurance options.
By paying a daily fee you can reduce the amount you are liable for and the amount debited against your credit card.
These reduction fees vary between companies, type of rental vehicle and even location. Expect to pay $25-$28 per day for a small or standard sized vehicle, $30-$36 per day for luxury and 4 Wheel drives. The amount these fees reduce your liability also varies from aroung $350 for small vehicles to $1600 for some of the 4 wheel drives.
How can my Travel Insurance help me?
There is another option which can cover your entire excess liability albeit with a couple of strings. Travel insurance and Credit Card agreements. Many travel insurance policies and credit cards include car hire excess insurance cover. However the catch (as such) is that you need to claim back from the insurance company after travelling and therefore your credit card will be charged the full excess insurance amount and processed as if no excess reduction option had been taken. It is critical that you have all documentation relating to the vehicle damage and circumstances (a police report even in minor single vehicle accidents is essential). So whilst this option will see you reimbursed that may not occur until after your trip.
With the prevelance of camera equipped phones a great tip is to take photos of any internal or external scratches, markings or signs of damage when picking up your vehicle and before leaving the rental branch. In addition bring this to the attention of rental staff and ensure a written record is agreed upon.
Ultimately the decision to take excess insurance options or not is a personal one, weighing up the risk against the cost of the additional premiums and the impact upon your credit card of the standard excess charge during youre rental. The travel insurance option offers one of the cheapest paths taking into account that there may be a delay before you receive reimbuserment from your insurance company in the event of an accident.
Explore your options when you pick up your vehicle or with your insurance company before travelling.