Anyone who has owned a car knows and appreciates the importance of having car insurance. Drivers can have a perfect driving record and still be involved in an accident through no fault of their own, resulting in damage to their vehicle and others. It is a great relief for motorists to know that they can make an insurance claim under a comprehensive policy, and leave the details up to the insurance company to manage.
Booking a rental car in Melbourne involves just the same amount of risk as driving your own vehicle, so making sure you have the correct hire car insurance is essential. There are some complexities in this type of car insurance, so reading the product disclosure statement to see what is included and what is excluded is absolutely vital. Unwary or uninformed travellers have been left with damage costs in the thousands after an accident in a hire car for which they were not covered.
What is Standard Liability or Collision Damage Waiver?
The first thing to know is that all car hire insurance in Australia has a basic level of cover known as Standard Liability or Collision Damage Waiver (CDW). This is the standard limit of how much the driver is liable to pay in the event of damages to the hire car, but can still leave the traveller with up to $3,000 to pay depending on the amount of damage. It is possible to have this amount reduced by including Excess Reduction (ER)/Liability Reduction Waiver (LRW)/Loss Damage Waiver Reduction (LDWR). This cover is optional but allows you to reduce your liability to a figure close to the basic insurance excess on most vehicles provided you are over 25 years of age.
Single Vehicle Accidents (SVA) and Windscreen, Headlights and Tyres (WHT) are often excluded and the standard insurance also does not cover damage to the overhead, underbody, interior or roof of the vehicle. It begs the question of just what is covered, especially when all these exclusions when requested, come at an additional cost. In the end, it all comes down to the level of insurance cover with which drivers feel comfortable and how much they are prepared to pay.
Travel Insurance might not be the way to go for car hire
For Australians, the alternative is to take out inclusive travel insurance when driving domestically. Some travel insurance providers include rental car excess coverage as one of the benefits. However, if an accident occurs the rental car company will change the customer for the damage and then it is up to the customer to recover the money from the travel insurance company. This occurs because the travel insurance contract is between the insurance company and the customer, not the car rental company. This can sometimes take 3 – 6 months to process, all the while your credit card is accumulating interest. On more occasions it is better to take the excess waiver offered from the car hire company, yes you pay a bit more but you have less things to worry about.
Some credit card companies offer car rental insurance as one of their benefits. If this is the case with your credit card make sure to check the fine print as some of the policies have a term that you must take out the lowest possible excess offered to you before they will cover any costs. For example, if the standard excess is $3,000 and the car rental company offers a package to reduce this to $550, you must take this package otherwise your credit card travel insurance will not be valid. Again it might be worthwhile just paying for the excess waiver with the car hire company.
Car hire insurance is an area unfamiliar to many travellers hiring a car for the first time. Before embarking on the trip, the driver should check all available options and levels of cover to make sure that, should the worst happen and they are involved in a major accident, their liability is covered by insurance.