By Chris Schulz
Investigative Journalist | Kaipūrongo Whakatewhatewha
If you've ever rented a car, you’ll know there’s a big decision you have to make when you go to pick it up.
Do you take a risk and agree to pay the huge excess if your hire car gets damaged?
Or do you pay a daily rate to lower that excess, pushing the cost of your rental car up? These are sometimes called excess waivers or excess reduction.
Consumer NZ is frequently asked this question. Our advice is there’s usually a cheaper option – taking out travel insurance – but there are a few things to be aware of.
Will your travel insurance cover that excess?
International travel
If you’re travelling internationally, we think you should always take out an insurance policy. That policy might have coverage for an excess on your rental car.
Just how much it covers depends on your policy, says Consumer NZ insurance expert Rebecca Styles.
Our travel insurance comparison makes it easy to see how much of the excess a policy will cover.
In putting together our comparison, we’ve found there can be a big difference between how much. Some we’ve looked at only offer $3,000 while others cover $10,000.
"Car excess coverage is sometimes also an optional add-on to travel insurance so it’s worth double-checking you’re covered for it,” Styles said.
“It’s also a good idea to check your policy or call and ask about any rules around the excess coverage. Some might have exclusions for things like tyres and windscreens.”
Domestic travel
If you’re hiring a car in New Zealand, you may be better off taking out a comprehensive travel insurance policy that will cover a large excess, rather than paying the rental car company a per-day rate.
Keep in mind
Styles says it’s worth keeping in mind that if you’re relying on insurance to pay the excess you’ll have to come up with the excess up front, then claim it back from your insurer. You’ll also have to pay the excess on your travel insurance policy, which will likely be a few hundred dollars.
Best and worst travel insurance companies
Compare travel insurance policies
It’s vital to make sure your travel insurance policy has enough cover – particularly for travel to the US. We explain what to look for in a travel insurance policy and common traps to avoid.
