Planning on Hiring a Car on Your Next Holiday?
Hiring a car gives you the freedom to explore at your own pace, whether you’re planning an Australian road trip or renting a car overseas.
But before comparing rental prices, it’s worth understanding car rental insurance and excess. The cheapest daily rate isn’t always the cheapest option once insurance, excess reduction, additional drivers and other fees are taken into account.
Renting a Car in Australia
Australia’s size makes hiring a car one of the best ways to explore beyond the major cities. It gives you the flexibility to visit small towns, beaches, national parks and regional areas that can be difficult to reach by public transport.
Before booking, compare more than the headline rental price. Check the insurance and excess, kilometre limits, additional-driver fees and one-way charges, as well as any restrictions on where the vehicle can be driven.
Compare car rental options and prices here →
Progressive Traveller Tip: When you collect your rental car, photograph or, better still, video the entire vehicle before driving away. Pay particular attention to existing scratches and damage, as well as the rims, tyres and side mirrors, and make sure any damage is recorded on the condition report.
Car Rental Companies
Australia has several major car rental companies, along with smaller national and local operators. Knowing which one to choose isn’t always straightforward. Discover Cars allows you to compare vehicles and prices from a range of car rental companies in one place.
While prices can look similar, it’s important to check what’s actually included. Before booking, read the rental conditions carefully and pay particular attention to the insurance, excess, kilometre limits and exclusions.
Understanding Your Liabilities
Anyone who has rented a car will probably recognise that moment at the rental counter when you’re asked whether you’d like to pay extra to reduce your excess.
It’s an easy decision to make under pressure, particularly after a long flight when you just want to collect the keys and get going. But additional insurance or excess-reduction products can add considerably to the overall cost of your rental.
Before you travel, understand what you’re already covered for, how much your excess is and what isn’t covered.
Depending on your booking, you may have several options, including the rental company’s excess-reduction product, separate rental car excess insurance, or cover through your travel insurance or an eligible credit card.
Knowing your options before you reach the rental counter can help you avoid paying for unnecessary cover while making sure you’re comfortable with your financial liability if something goes wrong.
Purchasing Car Rental Insurance
When you hire a car, the rental agreement usually limits how much you’re liable to pay if the vehicle is damaged or stolen, provided you comply with the terms and conditions. However, that liability can still amount to several thousand dollars.
Rental companies generally offer optional products that reduce this liability, but these can add considerably to the daily rental cost. Before paying for additional cover, check whether you already have suitable rental car excess cover through your travel insurance or eligible credit card.
What is Car Rental Excess?
Car rental excess is the amount you may be liable to pay if your rental vehicle is damaged or stolen.
In Australia, standard excesses can be around $6,000 or even higher, depending on the rental company, vehicle and circumstances. Rental companies usually offer an optional excess-reduction product for an additional daily fee, which can substantially reduce your liability.
Before accepting it, check exactly what you’re paying for and whether you already have appropriate cover elsewhere.
Know What’s Included in Your Cover
Don’t assume that reducing your excess means you’re covered for everything.
Depending on the rental agreement, exclusions or additional charges may apply to windscreens, tyres and wheels, underbody or overhead damage, towing, lost keys and single-vehicle accidents.
You may also lose some or all of your protection if you breach the rental agreement, such as driving on prohibited roads, allowing an unauthorised driver to use the vehicle or using the wrong fuel.
Always read the rental conditions before collecting the vehicle, particularly the sections covering damage, exclusions and your maximum liability.
No Surprises
Damage to a rental car can cost more than simply repairing a scratch or dent.
Depending on the rental agreement and circumstances, you may also face towing, administration or other charges. Some agreements may also make you liable for loss-of-use costs while the vehicle is unavailable for rental.
This is why the cheapest rental price isn’t necessarily the best deal. Compare the total rental cost, excess and exclusions before booking.
Progressive Traveller Tip: Ask yourself one simple question before declining excess reduction: Could I comfortably pay the full excess if something happened to the car? If the answer is no, make sure you have adequate cover in place before you drive away.
Is Excess Cover Insurance Worth Getting?
When you rent a car, you’ll usually be offered the option to pay an additional daily fee to reduce the amount you’re liable for if the vehicle is damaged or stolen. Over a week or two, these daily charges can add considerably to the cost of your rental.
An alternative is rental car excess insurance, which may be available as a standalone policy or included with some travel insurance policies and eligible credit cards.
The important difference is how the cover works. With the rental company’s excess-reduction product, your liability is generally reduced at the time of rental. With separate excess insurance, you may still need to pay the rental company for the damage and then make a claim with your insurer for reimbursement.
Whether excess cover is worth getting depends on the cost, the level of cover you already have and how comfortable you are with potentially paying the rental company’s full excess.
Not All Policies Are the Same
Always read the terms and conditions before relying on an excess insurance policy, particularly when hiring a car overseas.
Check the maximum amount covered and look carefully at the exclusions. Depending on the policy, these may include tyres, windscreens, underbody or overhead damage, towing, administration fees, lost keys and certain types of accidents.
It’s also important to follow the conditions of your rental agreement. Driving on prohibited roads, allowing an unauthorised driver to use the vehicle or otherwise breaching the agreement could affect your protection.
Before buying additional cover at the rental counter, check whether your travel insurance or eligible credit card already includes rental car excess cover. You may find you’re already covered.
Travel Insurance vs Excess Cover
Some comprehensive travel insurance policies include rental car excess cover, while others offer it as an optional extra. This can reimburse you for some or all of the excess you’re required to pay if your rental car is damaged or stolen, up to the policy limit.
Before relying on travel insurance, check exactly what is covered. Look at the maximum benefit, exclusions, eligible vehicle types and whether you’re covered for things such as tyres, windscreens, towing or damage that occurs on unsealed roads.
It’s also worth checking how a claim works. With travel insurance or standalone excess cover, you may need to pay the rental company first and then claim reimbursement from your insurer.
Compulsory Third Party Insurance
In Australia, registered vehicles are covered by a Compulsory Third Party (CTP) insurance scheme, although the way these schemes operate varies between states and territories.
CTP insurance relates to injuries caused to people in a motor vehicle accident. It doesn’t cover damage to the rental vehicle, another person’s vehicle or other property.
If you’re renting a car overseas, don’t assume the insurance arrangements will be the same as they are in Australia. Requirements and levels of protection vary considerably between countries, so check what’s included in your rental agreement before travelling.
Progressive Traveller Tip: Before paying for additional cover at the rental counter, check your travel insurance and eligible credit cards. You may already have rental car excess cover, but always check the limits and exclusions.
You’re All Set
Car rental insurance doesn’t need to be confusing. The key is to understand your excess, know what’s included in your rental agreement and check whether you already have suitable cover through travel insurance or an eligible credit card.
Do this before you travel and you’ll be in a much better position when you’re standing at the rental counter and asked whether you’d like additional cover.
Before booking your next rental car, compare the total cost, not just the daily rental rate, and always read the conditions and exclusions before you drive away.
Progressive Traveller Tip: Keep a copy of your rental agreement, insurance details and your photos or video of the vehicle until the final charges have cleared after you return the car.
Hiring a Car with Infants and Children
If you’re hiring a car in Australia with infants or young children, make sure you organise the correct child restraint before you travel. Many rental companies offer baby seats and booster seats for an additional fee, but availability can be limited, so it’s best to reserve them when you book your vehicle.
Australian child restraint laws generally require:
- Babies under 6 months to travel in an approved rear-facing restraint.
- Children aged 6 months to under 4 years to use an approved rear-facing or forward-facing restraint with an inbuilt harness.
- Children aged 4 to under 7 years to use an approved forward-facing restraint with an inbuilt harness or an approved booster seat.
- Children aged 7 years and over to use a properly fitted seatbelt, although children who are still too small for an adult seatbelt should continue using an appropriate booster seat.
Children under four must not travel in the front seat of a vehicle with two or more rows. There are also restrictions on children aged four to under seven travelling in the front seat.
Progressive Traveller Tip: Don’t assume a child seat will automatically be included with your rental car. Request one when booking, check the additional cost and confirm that it’s suitable for your child’s age and size. When collecting the car, make sure the restraint is correctly fitted before leaving the rental location.
For more information about driving safely in Australia, including seatbelts and child restraints, visit the Australian Government’s road safety information. Child restraint laws are administered by individual states and territories, so also check the local road rules for wherever you’ll be driving.
Pet-Friendly Car Rental Companies in Australia
Travelling with your pet? Don’t assume every rental company will allow animals in its vehicles. Pet policies vary between companies and may also differ depending on the vehicle or rental location.
Before booking, check whether pets are permitted and whether any conditions apply. Some companies may require pets to be appropriately restrained or transported in a carrier. Additional cleaning fees may also apply if the vehicle is returned with excessive pet hair, odours or other cleaning required.
It’s worth confirming the policy directly with the rental location where you’ll collect the vehicle, particularly if you’re travelling with a larger dog.
Car Safety Rules for Dogs in Australia
If you’re travelling with a dog, remember that road rules and animal-restraint requirements can vary between Australian states and territories.
Your dog should be safely secured while you’re driving, including when travelling in a hire car. Before setting off, check the rules that apply in the states or territories you’ll be visiting.
Continue Exploring Australia
Planning to hire a car and explore more of Australia? These Progressive Traveller guides may help with your next trip:
Brisbane to Sydney Road Trip – a five-day road trip with plenty of worthwhile stops along the way.
Discover Murwillumbah & the Tweed Valley – discover one of my favourite parts of Northern NSW, including scenic drives, country towns and the Northern Rivers Rail Trail.
Weipa Travel Guide – practical advice and things to do when visiting this remote part of Cape York.
Condong Sugar Mill – a fascinating stop near Murwillumbah for anyone exploring the Tweed Valley and Northern Rivers by car.
Disclosure: This article contains affiliate links. Progressive Traveller may receive a small commission if you make a purchase through these links, at no additional cost to you.
