Car rental is sometimes an unavoidable cost when visiting another city or town for business or pleasure.
But many Australians can find that the price they booked for can more than double once their damage liability – commonly called excess – is reduced from as much as $6,000 to something more manageable.
The on-the-spot excess reduction can cost as much as $40 a day, while the car rental itself might only be $20 or $30 a day.
"You don't have to pay to have your excess reduced, of course, but car hire staff around the world seem to be well-versed in convincing you that it's a really good idea to do so," said writer for consumer advocate organisation Choice, Andy Kollmorgan.
"This shakedown is happening while you're in the tumult of travel, under pressure, with people fidgeting in the queue behind you… It's one of the biggest bamboozle tactics going, and it doesn't look like it's going away anytime soon."
Excess reduction is a big cash cow for the industry, but there are ways not to succumb to the rip-off.
Here are three ways:
1. Travel insurance
Many travel insurance policies will cover car hire excess. But not all do, so it's worth looking for this specific feature if you know you'll be hiring a car.
If you choose this option, you will still need to pay the excess that the rental company demands.
"You would then submit your claim with supporting documents and, once assessed by your insurer, your excess would be reimbursed," says Compare The Market.
"This may seem like a hassle for some, but the potential savings and added peace of mind is often worth the cost."
As an example, coverage from Budget Direct for a 15-day domestic holiday for two adults and two children costs $71.14 online, which is just $4.74 per day. This policy will pay out up to $4,000 of car rental excess.
And of course, another advantage of travel insurance is that many other unfortunate possibilities are covered – like luggage loss, cancellation fees and medical expenses on international trips.
2. Excess reduction insurance
For shorter trips, full travel insurance might become too expensive on a per-day basis.
For example, the same family of four going away for just two days will pay $48.45 for the same Budget Direct policy, which works out to be $24.23 per day.
A better option for short trips might be to buy specific car rental excess insurance from a third party.
Using TripCover as an example, a policy to cover excess up to $4,000 for two days costs just $9.30 to bring the liability down to $300. If you want $0 excess then the premium is $13.60.
Car hire excess insurance is purchased per vehicle, so the price does not vary whether you're travelling solo or with a family of nine.
3. Credit cards with car hire excess reduction
Some premium credit cards come with car hire excess coverage.
So if you already have one of those, you don't need to do anything to enact the protection other than pay for the car using the card.
One example of this is the HSBC Platinum Visa card, which brings down rental car liability from $3,000 down to $200. The card will also cover up to $500 of costs of returning the car back to the rental company, in case you're unable.
The same caveat applies here that any excess demanded from the rental provider will have to be paid upfront, then a reimbursement can be made with the card provider's insurer afterwards.
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