Renting a vehicle can be one of the most confusing, frustrating and potentially risky parts of travel, especially when it comes to understanding the insurance cover you may (or may not) be getting. Get things wrong and you could suddenly find your holiday becomes a very expensive one!

If you rent a vehicle in most countries in the world excluding Canada and the United States, you’ll typically find yourself with several options for the excess or excess reduction when you make your booking. In the example below from Apex Car Rental here in New Zealand you’ll see a $2,000 excess is standard – this is known as a collision loss waiver (CDW) or loss damage waiver (LDW). You’ll also see additional CDW/LDW excess reduction options to reduce this to $500, or to zero.

If you hire a car with a CDW or LDW offering a $2,000 excess it means you’ll be liable for a maximum of $2,000 for any damage to the vehicle while rented to you. Take the zero excess option and you will not be liable for any damage to the vehicle.

It’s worth remembering here that “damage” may not just involve a crash – if you lose a key with a transponder for a modern vehicle you could easily face a $300+ bill for replacement. Stone chip damage to a windscreen can easily result in a $500+ bill if a full windscreen replacement is required. Most rental policies will also hold you liable for the excess regardless who is at fault – something that is the exact opposite of personal vehicle insurance which will typically only charge you an excess if you are at fault in an accident.

Another example is listed below from Thrifty Car Rental – in this case the standard excess is $3000 which can be reduced to $500 (confusingly it mentions 300 NZD liability which is obviously an error) for an extra $26 per day, or reduced to $0 for $31 per day.

by Steve Biddle

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