How rental vehicle excess cover works
When you hire a car you’re automatically covered if the car is damaged or stolen under a loss damage waiver (LDW) insurance. It’s a base-level insurance built into the hire cost, but it comes with an exorbitant excess: you can expect to pay between $5000 and $7000 if the vehicle needs repairs or replacement.
Car rental companies will offer an optional add-on that reduces the excess, but you’ll pay a high daily fee for it. Here is an example of the approximate fees you’ll pay if you hire a car through Budget Australia with the different levels of excess.
| Car hire cost per day | $90.50 | $90.50 | $90.50 |
|---|---|---|---|
| Insurance Cover | $0 (basic) | $39 (reduced excess) | $45.45 (zero excess) |
| Total cost per day | $90.50 | $129.50 | $135.95 |
| Excess: | $5445 | $838 | $0 |
As you can see, reducing the excess from $5445 to a more reasonable $838 will cost almost $40 extra per day. If you hire the car for a week, that’s $280 more on the bill.
Let’s put that into numbers again assuming you hired a car in Sydney for 7 days. Here’s what it looks like to add the optional insurance:
Car hire cost: $640
Total car hire including reduced excess cost: $914
Total car hire cost including zero excess cost: $951
Complimentary car hire excess cover that comes with a credit card can help reduce the amount you pay on your excess without needing to pay more for optional cover.
How to use credit card rental vehicle excess cover
Car rental insurance on a credit card will typically cover vehicle hire in Australia or overseas if the card offers international travel insurance. You can see the at-a-glance table below to see which cards cover different regions.
To activate your vehicle excess cover, you usually need to pay for the car hire on your credit card. It’s a good idea to check the PDS to make sure you’re covered before you confirm the car hire reservation.
What am I covered for?
All credit card providers will have different terms, but here is an example of what you may be covered for:
- An accident while you’re driving
- Theft or damage to the vehicle
- Windscreen damage (if it’s covered under the rental company agreement)
Typically your excess won’t be covered for damage, theft or injury if you are:
- Driving while under the influence
- Using the car in breach of the car hire agreement, such as hauling freight that you don’t have a licence for
- Renting a vehicle from the exclusions list, such as trucks, mini buses, trailers, campervans, motorcycles and mopeds.
Personal experience: having rental excess insurance on a holiday
On the second day of a 10-day trip around Tasmania, our hire car windscreen was hit by a huge rock. It left a giant chip in the glass. The excess on the car was $5000+. But, I knew our credit card had rental vehicle excess cover. I checked the terms and voila! We were covered under our rental agreement.
We enjoyed the rest of our trip without worrying about an enormous bill at the end. Rental vehicle excess cover may not be something you use frequently, but it makes a big difference when you need it.
- Pauline
How do I make a claim?
Most credit card insurance is underwritten by a third-party insurance company, so the underwriter may be your first port of call rather than the credit card company.
For instance, ANZ travel insurance is underwritten by Allianz. ANZ is very clear that claims must be lodged directly with Allianz via the online claim form.
The claim process will be specified in the terms of your credit card. Here’s a general idea of how a claim process could go:
- Contact the insurance provider before you make any payments
It’s a good idea to contact your provider as soon as you can to find out your next steps. Try to avoid making payments to the car hire company until you’ve contacted the insurance provider. - Gather all your relevant documents
You’ll likely need to provide your driver's licence, rental car hire agreement and any invoices, police reports and photos of any damage. - Fill in a claim form
Some companies have claim forms online, or you may need to complete the process over the phone.
Terms and conditions to look out for
The terms and conditions listed in a PDS can be painful (and boring) to read through, but for insurance it’s a crucial step. You want to make sure you’re covered and that you’re getting the best deal.
Here are some common terms to look for (but remember it varies between providers):
Specific cover restrictions: certain damage may be excluded from cover. For instance, damage to tyres or the underbody may not be covered. Windscreens are often only covered if it’s also listed as a covered item under the rental company’s policy.
Eligibility for cover: make sure you meet the eligibility criteria to activate the cover. That will usually mean paying for the car hire on your credit card, or it could mean paying a minimum amount of your entire trip on your card.
Where you’re travelling: some credit cards cover you for domestic and international car hire, and some will offer one or the other. Make sure you’re travelling to a location covered by the card’s car rental excess insurance.
Snapshot of rental vehicle excess cover on credit cards
| Card Brand | Insurance Cover | Cards that offer insurance |
|---|---|---|
| ANZ | Excess cover in Australia up to $5000 (with a $100 excess per claim) if you use an eligible ANZ card to pay for your trip. | ANZ Frequent Flyer Platinum ANZ Frequent Flyer Black ANZ Qantas Business Rewards ANZ Rewards Platinum ANZ Rewards Black |
| BankSa | Excess cover in Australia up to $5500 (with a $300 excess per claim) when the entire cost of the car hire is charged to your credit card. | Amplify Platinum Amplify Platinum - Qantas Amplify Signature Amplify Signature - Qantas |
| Bank of Melbourne | Excess cover in Australia up to $5500 (with a $300 excess per claim) when the entire cost of the car hire is charged to your credit card. | Amplify Platinum Amplify Platinum - Qantas Amplify Signature Amplify Signature - Qantas |
| Bankwest | Excess cover in Australia up to a maximum of $3000 (with a $250 excess per claim). | Bankwest Breeze Platinum Bankwest Qantas Platinum |
| Bendigo Bank | Excess cover in Australia and overseas up to $5500 (with a $250 excess per claim) when the entire cost of the car hire is charged to your credit card. | Bendigo Bank Platinum Rewards Bendigo Bank Qantas Platinum Bendigo Ready |
| Citi | Excess cover in Australia up to a maximum of $10,000 for all combined claims. A $100 excess applies per claim. The car hire cost must be charged to the credit card to be eligible. | Citi Premier Citi Premier - Cashback Offer Citi Prestige Citi Premier - Velocity Offer Citi Rewards Citi Rewards - Flybuys Offer Citi Rewards - Velocity Offer |
| CommBank | Excess cover up to $2250 for international travel Overseas: Offers overseas rental vehicle excess insurance of up to $2,250. You may also be given the option of increasing the value of this cover for specific trips. | Ultimate Awards |
| HSBC | Excess cover in Australia up to $6000 or the amount specified in the rental vehicle agreement (whichever is lesser). Cover activates when the cost of the hire car is paid on your credit card. No excess applies. *HSBC Platinum and Platinum Qantas have an excess cover limit of $3000 | HSBC Low Rate *HSBC Platinum - Balance Transfer *HSBC Platinum - Qantas HSBC Premier World Mastercard HSBC Star Alliance |
| NAB | Excess cover in Australia when the car hire cost is charged to your credit card. Level 1 cards are covered up to a maximum of $10,000 and $5000 for Level 2 cards. | Level 1 cards: NAB Qantas Rewards Signature NAB Rewards Signature Level 2 cards: |
| Qantas Money | Qantas Premier Everyday and Qantas Premier Platinum: Excess cover up to $3000 for a domestic return trip or up to $4000 for an overseas return trip. A $500 excess applies. You must purchase the car hire cost and the comprehensive vehicle insurance on your card. Qantas Premier Titanium: Excess cover in Australia up to $5000 for each covered person with a $250 excess. for a domestic return trip or up to $4000 for an overseas return trip. You must purchase the car hire cost on your card. | Qantas Premier Everyday Qantas Premier Platinum Qantas Premier Titanium |
| St.George | Excess cover in Australia up to $5500 (with a $300 excess per claim) when the entire cost of the car hire is charged to your credit card. | Amplify Platinum Amplify Platinum - Qantas Amplify Signature Amplify Signature - Qantas |
| Westpac | Excess cover in Australia up to $5500 or the amount specified in the rental vehicle agreement (whichever is greater). Cover activates when the cost of the hire car is paid on your credit card. A $300 excess applies per claim. | Altitude Black Altitude Black - Qantas Altitude Business Gold Altitude Business Platinum Altitude Platinum Altitude Platinum - Qantas BusinessChoice Rewards Platinum |
