Often the terms and conditions of the insurance are unfair. In fact in Australia, the competition authority has been pursuing some rental car companies for just that, unfair contracts.
Even if the contract is 'fair' the high excess is normally $3k to $5k and rental car companies will often insist on a credit card bond for the full excess amount unless you purchase their low or zero-excess options.
Their zero-excess option is unsurprisingly a nice little earner for them; typically rental car companies will charge $17 - $20 per day. So, lets do the math:
- Annualized, the price per vehicle per year is $6,205 - $7,300.
- Typical claims per vehicle per year are normally between 0.1 to 0.3,
- Hence, on average rental car companies will only pay out $300 - $1,500.
The rental car company's gain is your loss. So how can you avoid it?
- Check your current car insurance policy, some insurers will extend cover for rental car excesses
- Check your credit card travel insurance, you may be covered provided you have met the conditions (international travel, majority of cost paid with card etc)
- Buy stand-alone domestic travel insurance which includes rental car excess insurance (e.g. 1Cover)
- If you are in the U.S. you can get stand alone rental car excess insurance
- Freeze the full excess through your credit card bond, noting that rental car companies often state that it can take up to one month to unfreeze your funds and if you are in a crash you may be up for the full excess amount
- Deposit one third of the excess through PeerCover sharing the risk with your peers
We don't think it just the rental car companies that are making motza from low excess options. That's why we invented PeerCover - so you can pay less for insurance whilst PeerCovering your high excess.