Collecting the keys to a hire car feels liberating—until you spot an excess of $4,000, $6,000 or even $8,000 on the agreement. That figure is what you must pay if the vehicle is damaged or stolen, and rental desks push “excess reduction” at $30–$45 a day to shrink it. There’s a smarter move: stand-alone rental excess insurance that cuts the daily cost to about $5.
This guide unpacks how excess works, the pros and cons of each reduction option, and real-world prices so you can hold on to more cash. We’ll cover limits, hidden exclusions and claim steps, then line-up Australia’s key providers—including National Cover—for a clear comparison. Read on to choose the easiest, most cost-effective protection for your next road trip.
What Is Rental Car Excess and Why Is It So High?
Before you even leave the car-park, every hire contract makes you the first line of defence against damage. The “excess” (sometimes $8,000 or more) is the amount you must cough up before the rental company’s own insurance takes over. Understanding that figure is step one to deciding whether you need rental car excess reduction at all.
Definition of rental car excess
Think of excess as a deductible: the maximum you’ll pay if the vehicle is damaged, stolen or involved in a third-party incident. The rental operator charges you that amount, then claims the balance from its insurer. Contracts may label it “Damage Liability Fee”, “Collision Damage Waiver excess” or simply “deductible”.
Typical excess amounts in Australia by vehicle type
- Economy hatch: $3,300–$4,400
- Mid-size sedan/SUV: $4,400–$5,500
- 4WD, ute or van: $5,500–$7,700
- Prestige or luxury: $7,700–$8,800+
Add $550–$1,100 for drivers under 25, and expect higher figures in remote areas or on one-way outback hires.
Why rental companies set high excess
A chunky excess shifts risk to renters, discouraging careless driving and covering admin costs, towing and “loss of use” while the car is off the road. It also lets firms advertise low daily rates, then recoup revenue by selling expensive add-ons that shrink—but rarely eliminate—that excess.
Standard Insurance vs Excess Reduction Options
Every hire in Australia already comes with some level of insurance, yet that protection still leaves the full excess sitting on your credit card. Below we run through the four main ways to shrink that liability—plus a side-by-side snapshot so you can decide which rental car excess reduction route fits your trip and wallet.
Basic cover included in Australian car hire
By law, rentals include Third-Party Liability and a Collision Damage Waiver/Vehicle Damage Cover. They cap the total you could owe, but they don’t remove the excess: you’re still up for up to $8,000 if something goes wrong. Windscreens, tyres and under-body damage are frequently excluded.
Excess Reduction (ER) sold at the rental counter
Also called Super CDW or Damage Liability Waiver, ER is the product staff will upsell when you collect the keys. It typically costs $30–$45 a day and may only cut the excess to $300–$1,000. Common catches: no cover for single-vehicle rollovers, roof or water damage, and you must accept the rental company’s repairer.
Stand-alone rental car excess insurance policies
Buy online before pick-up for roughly $5–$12 a day (or $120–$180 for annual cover). Limits of $5,000–$10,000 usually wipe the excess entirely, and many policies add windscreens, tyres and towing. Process: pay the rental company first, then claim reimbursement—so keep receipts.
Credit card and travel insurance cover
Premium cards (e.g., Visa Platinum, Amex Explorer) and comprehensive travel insurance sometimes include excess reimbursement up to $5,000. You must pay with the same card, adhere to time limits and accept exclusions on luxury cars, motorhomes and off-road use.
Pros and cons comparison table
| Option | Daily Cost (avg) | Excess after cover | What’s covered | Key exclusions | Claim method | Ideal for |
|---|---|---|---|---|---|---|
| Basic included cover | $0 | $3k–$8k | Collision, liability | Windscreens, tyres | N/A | Risk-tolerant drivers |
| Rental-desk ER | $30–$45 | $0–$1k | Collision, theft | Roof, under-body | Offset at counter | Short weekend hires |
| Stand-alone policy | $5–$12 | $0 | Excess, windscreens, towing | Off-road misuse | Reimbursement | Trips 4+ days, frequent renters |
| Credit card / travel ins. | $0 (included) | $0 | Varies by issuer | Luxury vehicles, campers | Reimbursement | Cardholders, two-to-three hires |
How Much Does Excess Reduction Cost? Real-World Numbers
Sticker shock usually hits at the counter, so here are the numbers you can plug straight into your budgeting spreadsheet. Prices are public rates collected July 2025 and can move with location and vehicle class, but the deltas between options stay remarkably consistent.
Daily charges from major rental brands in 2025
| Brand | State metro price | NT/outback price | Residual excess after ER |
|---|---|---|---|
| Avis | $37 | $44 | $0 |
| Budget | $35 | $42 | $300 |
| Hertz | $38 | $46 | $0 |
| Europcar | $39 | $48 | $0–$500 |
| Sixt | $33 | $41 | $550 |
| Thrifty | $36 | $45 | $385 |
Average counter cost: $30–$45 per day, climbing 15–20 % in the Northern Territory. Even after paying, you might still be liable for a few hundred dollars.
Stand-alone policy costs: single-trip vs annual
- Single-trip bought online: $7–$12 a day for the first 14 days, then often drops to around $4–$6.
- Annual/multi-trip cover: $120–$180 for unlimited domestic hires, breaking even if you rent three times a year or take one long four-week holiday.
- Limits typically sit at $8,000–$10,000, wiping the excess completely.
Hidden fees and credit-card hold implications
A high residual excess means the rental company blocks $3k–$8k on your card. That ties up spending power and can trigger over-limit fees at home. Some firms also tack on an “administration fee” of $60–$110 after any incident—even if ER was purchased.
Example cost scenarios: 3-day vs 14-day hire
Scenario 1: Weekend city hire (3 days)
- No ER: $0 extra; risk $5,500
- Rental-desk ER: $37 × 3 = $111; residual $0
- Stand-alone policy: $10 × 3 = $30; residual $0
Saving with stand-alone: $81 (73 %)
Scenario 2: Two-week road trip (14 days)
- No ER: $0 extra; risk $5,500
- Rental-desk ER: $37 × 14 = $518; residual $0
- Stand-alone policy: $10 for first 7 days + $5 for next 7 = $105; residual $0
Saving with stand-alone: $413 (79 %)
These numbers make it clear: independent excess cover usually wins, especially once your hire stretches past a long weekend.
What’s Covered—and What’s Not
Policies that promise to wipe your excess look similar at first glance, yet the devil hides in the Product Disclosure Statement. Spend two minutes skimming the fine-print now and you could avoid an ugly shock when you lodge a claim later.
Common inclusions
- Collision damage (multi-vehicle and single-vehicle accidents)
- Theft or malicious damage
- Severe weather events such as hail, flood and bushfire
- Towing and storage fees
- Loss-of-use charges the rental company bills while the car is off the road
- Key replacement or “drop-box” theft
- Windscreen, window, tyre and hubcap damage—often excluded by the rental desk but picked up by specialist insurers
Common exclusions
- Overhead or under-body strikes (think car-park height bars or cattle grids)
- Roof racks, awnings and bike carriers
- Interior spills, burns or pet damage
- Mechanical failure caused by misuse, including clutch abuse
- Water-crossing or beach driving
- Any breach of the rental terms, e.g. unsealed-road driving when prohibited or driving under the influence
Special clauses to watch
Some policies sneak in extra hurdles:
- Young-driver surcharge or outright refusal for under-21s
- Geographic limits on remote tracks such as the Gibb River Road
- “In motion only” wording that denies cover for door-dings in car parks
- A policy excess (often $100–$250) payable on top of the rental claim
Tip: photograph the vehicle from every angle at pick-up and drop-off—timestamped images are gold if your rental car excess reduction insurer asks for evidence.
How to Choose the Best Excess Reduction Cover for Your Trip
Shaving dollars off a rental bill is great—but only if the cover still does the job. Use the mini-checklist below to lock in protection that matches your risk profile and itinerary without overpaying for bells and whistles you’ll never need.
Matching cover limit to rental excess
Open the booking confirmation, find the listed excess, then pick a policy with a slightly higher limit—excess × 1.1 is a handy rule-of-thumb. Too low and you’ll be out-of-pocket; too high and you’re funding unnecessary capacity.
Checking geographic restrictions and licence rules
Heading to the Top End or planning a quick hop into New Zealand? Make sure the insurer doesn’t exclude remote tracks, ferries or cross-border drives and that your licence tenure meets minimum requirements (often 12 months).
Claim process and any excess on the excess policy
Some stand-alone covers have their own $100–$250 deductible; others don’t. Zero excess plus online claims within 30 days usually delivers the smoothest reimbursement.
Provider reputation, financial strength and regulatory status
Stick with AFSL-licensed brands backed by solid underwriters. Scan recent customer reviews for claim-handling speed and download the PDS before entering your card details.
Comparing Australian Excess Reduction Providers
Daily prices swing, but grouping options shows where the value sits. Rental-desk add-ons are the priciest, specialist insurers sit in the middle, and data-driven newcomers like National Cover aim to undercut everyone.
Rental desk vs stand-alone cover at a glance
Counter products from Avis, Budget, Hertz and the like average $35–$40 a day and still leave a token excess. Online policies from Allianz, 1Cover and similar hover around $7–$12, wipe the liability completely and refund you after you pay the rental bill.
Where National Cover fits
National Cover uses ASIC-licensed pricing analysts and a price-beat guarantee to keep premiums sharp. Claims are handled in-house, and customers who use preferred repairers can snag a further excess discount.
Quick comparison table
| Provider | Type | Cost per day | Cover limit | Residual excess | Perks |
|---|---|---|---|---|---|
| Avis | Desk | $37 | $8k | $0 | Instant waiver |
| Budget | Desk | $35 | $8k | $300 | Nil card claim |
| Hertz | Desk | $38 | $8k | $0 | Zero excess |
| Allianz | Stand-alone | $9 | $8k | $0 | Adds windscreens |
| 1Cover | Stand-alone | $8 | $8k | $0 | Campervan option |
| CarHireExcess | Stand-alone | $7 | $10k | $0 | Annual plans |
| National Cover | Stand-alone | $7* | $10k | $0 | Price-beat, repairer discount |
*Indicative, varies by vehicle and location.
Claiming Back Your Excess After Damage—Step-by-Step
Most excess-reduction policies reimburse you after damage. A clean paper trail is the secret to getting your money back quickly.
Gather documentation immediately
- Damage report + time-stamped photos
- Police report (if theft / collision)
- Final rental invoice showing excess
- Bank or card proof of payment
Pay the rental company first
Stand-alone and credit-card cover need the excess paid up front; rental-desk waivers usually eliminate any payment.
Lodge your claim
Submit the online form within 30–60 days, attach all files in one PDF and keep originals until you’re reimbursed.
Speed things up
Label files clearly, use hi-res images and chase the assessor if no update appears after the promised timeframe.
Rental Car Excess Reduction FAQs Australians Ask
Still scratching your head? The bite-size answers below clear up the four doubts Aussie renters raise most often at the booking screen and pick-up counter.
Is excess protection worth it for a car rental?
Yes—for most hires it’s cheaper to pay $5–$12 a day for external cover than risk a $5,000 bill. Weigh the small premium against both the likelihood of damage and your personal risk tolerance.
Is car hire excess reduction an insurance product in Australia?
Excess Reduction from the rental desk is a waiver, not insurance, so it’s unregulated. Stand-alone policies sold online are genuine insurance products and must display an Australian Financial Services Licence (AFSL).
What is Budget’s excess reduction fee?
Budget advertises Excess Reduction from $35 a day in capital cities and $42 in the NT, usually leaving you with a residual excess of $300.
Can I rely on my credit card’s cover?
Premium credit cards may cover up to $5,000, but you must use the card for the booking, decline rental-desk ER and meet all vehicle rules.
Drive Away With Confidence
Rental cars shouldn’t feel like a financial time-bomb. Nail down the excess figure before you book, line it up with cover that actually wipes it, and skim the exclusions so you know where you stand. A few minutes of homework beats handing over thousands later.
Key checkpoints before you hit the road:
- Confirm the exact excess and any young-driver surcharges
- Compare rental-desk ER against stand-alone rental car excess reduction policies
- Photograph the car at pick-up and drop-off, inside and out
- Keep every receipt so a claim can’t be knocked back on a technicality
Follow those steps and you’ll cruise away knowing one swipe of a branch or rogue shopping-trolley won’t torch your holiday budget. Want a sharp, data-driven quote backed by a price-beat guarantee? Get covered with National Cover and keep your next journey stress-free.
