Every rental car in Australia comes with basic damage and theft cover, but it comes with an excess: the amount you pay if the car is damaged or stolen, whoever is at fault. On a standard car it is commonly several thousand dollars.
This guide explains what basic cover includes, how the excess works, the ways to reduce it and the exclusions that apply whatever you buy.
At a glance
1What Basic Cover Includes
The rental price includes compulsory third-party (CTP) insurance for injuries to other people, cover for damage to other people’s property, and cover for damage to or theft of the rental car itself. The catch is the excess, which you pay first on any claim on the rental car.
As an example of published figures, Avis lists a standard excess of A$5,900 for small to large cars, A$6,900 for four-wheel drives and luxury cars, and A$7,900 for its premium range, including admin fees, card surcharge and GST.
2Option 1: Reduce the Excess with the Supplier
At booking or at the desk you can buy the supplier’s own excess reduction. Avis, for example, lists a reduced excess of A$1,500 for standard cars and a zero-excess option. You pay a daily fee, so the cost grows with the length of the rental.
- Pros: claims are handled directly with the supplier, and the bond held on your card is often lower.
- Cons: it is usually the most expensive way to reduce the excess, especially on long rentals.
3Option 2: Standalone Rental Excess Insurance
Travel insurers and comparison sites sell cover that reimburses the excess if you have to pay it. It is usually cheaper per day than the supplier’s option and can cover several rentals in a year.
- Pros: lower cost, and some policies cover tyres, windscreen and keys.
- Cons: you pay the supplier first and claim the money back, and the full bond is still held on your card.
Some travel insurance and premium credit cards already include rental excess cover. Check the policy wording before you buy more.
4What Is Never Covered
Whichever option you choose, rental agreements exclude damage caused by breaking the agreement. Common exclusions are:
- Driving on unsealed roads, beaches or off-road where not permitted.
- Overhead damage (for example car park roofs) and underbody damage.
- Water damage from driving through flooded roads.
- Driving under the influence of alcohol or drugs, or by an unlisted driver.
- Taking the car on a ferry without permission.
- Lost keys and refuelling with the wrong fuel, unless specifically covered.
Also read: Are rental cars allowed on unsealed roads?
5Worked Example: Supplier Cover vs Standalone Cover
Imagine a 10-day rental with a standard excess of A$5,900. Reducing the excess with the supplier at an illustrative A$30 a day costs A$300, leaving you with a A$1,500 or zero excess. Standalone excess insurance bought for the trip might cost less, but if the car is damaged you pay the supplier up to A$5,900 first and claim it back. Which is better depends on your budget, your card limit and how much paperwork you want if something goes wrong.
| Supplier excess reduction | Standalone excess insurance | |
|---|---|---|
| Cost | Daily fee, adds up on long rentals | Usually lower, per trip or per year |
| If the car is damaged | You pay the reduced excess | You pay the full excess, then claim it back |
| Bond at pick-up | Often reduced | Full bond held |
| Tyres, windscreen, keys | Sometimes excluded | Often included, check the policy |
6Tolls, Fines and Damage Claims After the Rental
Charges can arrive weeks after you return the car. Tolls and traffic fines are passed on with admin fees. If the supplier finds damage after you have left, ask for photos, the repair quote and the condition report. This is why returning during opening hours, with the car inspected in front of you, is so valuable.
Keep your rental agreement, condition report and photos for at least three months after the rental.
7Protect Yourself at Pick-up and Return
- Photograph or video every side of the car, the roof, wheels and windscreen before you leave.
- Make sure existing damage is marked on the condition report.
- Return during opening hours so the car is checked with you, and photograph it again.
- Keep fuel and toll receipts.
Frequently Asked Questions
Is insurance included when renting a car in Australia?
Yes, basic cover is included, but it carries an excess of several thousand dollars that you pay if the car is damaged or stolen.
What is the excess on a rental car in Australia?
It varies by supplier and car. Avis, for example, lists A$5,900 for standard cars and A$6,900 for 4WD and luxury cars.
Is standalone excess insurance worth it?
It is usually cheaper than the supplier’s daily reduction, but you pay the supplier first and claim the money back, and the full bond is still held.
Does excess cover include unsealed roads?
No. Damage caused while breaking the rental agreement, such as driving on prohibited unsealed roads, is generally excluded.
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