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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 RentalCover.com 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 RentalCover.com 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.

Summary

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 RentalCover.com.
  • Regardless of who is "at fault", you will be required to pay for damages in any single or multi-vehicle accident. RentalCover.com 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:

About Our Price Guarantees

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About RentalCover.com

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Alternatives to RentalCover.com

How to make an informed choice when you get to the rental desk - your insurance options explained.
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Annual Plans

How Do I "Log" Rentals For My Annual Plan?

Claims

How do claims work for "Extra Cover" (for USA & Canada)?
How do claims work for "Zero Excess Rental Cover", "No Excess Rental Cover" & "Rental Vehicle Cover"?
When can I expect claims to be settled?
How do I make a claim?
Am I insured if I have more than one accident?
How do I report a claim for "Collision Damage Coverage" (for US Residents)?

Country: Asian Countries

What should I do at the rental desk in Asian Countries

Country: 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?

Country: Canada

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

Country: 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?

Country: Latin American Countries

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

Country: Namibia/Africa

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

Country: 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)?

Country: Worldwide

What should I do at the rental desk: Introduction

Damage Waivers (CDW, LDW, Super CDW, Super LDW)

What is "excess", "CDW", "LDW", "excess reduction", etc? And what is RentalCover.com?
How much do I pay if there's an accident?
How do "LDW" and "Super CDW" and "Super LDW" differ from simple "CDW"?

Managing/Cancelling/Modifying Policies

How do I cancel a policy, change dates or add coverage? What if I changed my rental vehicle?
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How much coverage do I need?
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Are additional drivers insured?
How do I change the name of the policy holder?
Who is insured? What is insured?
I bought a policy but changed my car. Do I need a new policy?
How do cancellations and refunds work?
What is a refundable deposit/bond? When does it get refunded?
How do I add coverage to my policy?
I have several rentals over a period of time. Do I need a policy for each rental? What if I have several countries to visit?
What are my policy's inclusions?

Personal Accident Insurance

What is PAI (Personal Accident Insurance)?

Supplemental Liability Insurance

What is SLI (Supplementary Liability Insurance)?

Theft Protection

What is Theft Protection?

Third Party Cover

Is "Third Party" included?
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?

Types of Vehicles & Types of Rental (Peer To Peer etc)

Are 4x4s Insured? What about unsealed roads?
What types of "rentals" are insured? Car shares? Loan cars from mechanics?

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