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How does Excess Reduction & Third Party Insurance work in Australia and New Zealand

Excess Reduction/Excess Waivers in Australia and New Zealand

Rental vehicles in Australia and New Zealand do not have Collision Damage Waivers (CDW). CDW is a policy sold by rental companies elsewhere in the world that reduces the excess that is payable in the event of an accident from the full value of the vehicle towards a lower limit (under AU$5,000, usually). CDW (and Loss Damage Waivers (LDW), which is just CDW plus Theft Protection) is included by default with a rental car (or can otherwise be included at the rental desk) in every country except Australia and NZ. If a renter does not have CDW or LDW in Europe, North America and South America their liability in the event of an accident would be the full value of the car. In Australia/NZ however, there is no CDW/LDW; the default liability (called "standard excess" or "standard liability") is usually somewhere below AU$5,000, although some large motorhomes have an excess of AU$7500.

The excess waivers for this lower amount are similar to Europe.

Third Party Damages

If you are driving a rental vehicle in Australia or New Zealand and you are involved in an accident with another vehicle the following process takes place:

1. If you cause the accident (i.e. you are "at fault") and damage another car

You will have to pay the repair costs for your vehicle (which would be insured by your policy). A small number of motorhome rental companies may also charge you for damages to other vehicles. These "third party damages" are excess charges (i.e. deducted from your credit card) and are insured by your policy. 

2. If you cause an accident and injure the other driver 

If the other driver is injured, the owner of your vehicle (i.e. the rental company) is liable, however the liability is mitigated by compulsory schemes for third party injuries in Australia and New Zealand. This is similar to Europe: the rental company cannot own or rent a car without having third party liability insurance, and as a result, renters do not have any liability (unless you have broken the law). 

In Australia, "third party cover" is provided by a private insurance company, whereas in New Zealand a government insurer called ACC looks after all injuries caused by motor accidents (it is a "no fault" scheme, which means there is no settlement process nor ongoing legal/claim issues for the drivers). 

3. If you did not cause an accident and you are injured 

The liability for your injuries rests with the other driver, who would have the same compulsory insurance that your rental company has for their cars. Your medical costs will be insured by their insurance.


In summary, if an accident occurs:

  • Injuries to drivers of the other car are insured by third party liability insurance. Third party liability cover is compulsorily held by vehicle owners. Drivers of rental vehicles have no liability for the other driver (unless you were breaking the law, e.g. driving under the influence of alcohol/drugs, etc.)
  • Damages to other cars that are charged out of your excess (and usually called "Third Party Damages" on the bill) by the rental company are always insured by
  • Regardless of who is "at fault", you will be required to pay for damages in any single or multi-vehicle accident. reimburses you those costs straight away and if we determine that the rental company would otherwise reimburse you later on, once their insurer successfully claims from the other driver's insurer, we will collect the funds on your behalf. More information will be provided during the Claims process. 
  • Our policies provide coverage to excess payments that you make to the rental company, so of course we provide coverage to third party damages! Whatever is on the final invoice, we pay!

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Please check if these questions are relevant or scroll down to contact us:


What are the benefits?
Who is & Who provides the coverage?
What is the Rating of Our Underwriters?
Why use
What have I got and what will I be offered at the rental desk?
Who are’s insurers?
Are additional drivers covered?
Should I just risk it?
What do I pay if there’s an accident?
What vehicles are covered?
What about unsealed roads?
How are coverage days calculated?
Am I insured if I have more than one accident?


When can I expect claims to be settled?
How do I make a claim?
How do I report a claim for "Collision Damage Coverage" (for US Residents)?
My claim has been approved. When will I receive payment?
What are the steps in the claims process?

Claims Info

What is the claim process?

Rental Guide: Destination Asian Countries

What should I do at the rental desk in Asian Countries

Rental Guide: Destination Australia/NZ

How does Excess Reduction & Third Party Insurance work in Australia and New Zealand
What should I do at the rental desk in Australia/NZ?

Rental Guide: Destination Canada

How does rental excess & CDW work in Canada? What are my options?
What should I do at the rental desk in Canada?

Rental Guide: Destination EU/UK

How does rental excess/CDW work in Europe? What are my waiver options?
What should I do at the rental desk in EU/UK?

Rental Guide: Destination Latin American Countries

What should I do at the rental desk in Latin American Countries

Rental Guide: Destination Namibia/Africa

How does rental excess & CDW work in Africa? What are my options?

Rental Guide: Destination United States

What are the insurance options in the USA? How does the US differ from most other countries?
How Does The Free Roadside Assistance Work for USA Policies?
What is Extra Cover for the USA? What do I say at the rental desk?
What should I do at the rental desk in the US?
What should I do at the rental desk if I am traveling abroad with Collision Damage Coverage (for US Residents)?

Rental Guide: Destination Worldwide

What should I do at the rental desk: Introduction

Rental Guide: Insurance products

What is "excess", "CDW", "LDW", "excess reduction", etc? And what is
Is "Third Party" included?
How do "LDW" and "Super CDW" and "Super LDW" differ from simple "CDW"?
What is SLI (Supplementary Liability Insurance)?
What is PAI (Personal Accident Insurance)?
What is Theft Protection?
Why do rental companies charge a large excess when the repair cost is small? What happens if I'm "not at fault"? Will I get my money back? When?

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