"road Trip Coverage: Car Travel Insurance Options In Australia"

 "road Trip Coverage: Car Travel Insurance Options In Australia" - Money driving a rental car abroad: should you risk not getting full rental car insurance coverage? Are you paying more for insurance coverage you don't need when you get comprehensive rental car insurance coverage? by Timothy Ho August 30, 2018

Here's a simple question that travelers who regularly rent and drive a car abroad would have considered before.

"road Trip Coverage: Car Travel Insurance Options In Australia"

When the car rental clerk asks if you would like to upgrade your insurance coverage for a "small" fee, so you can enjoy comprehensive rental car insurance coverage, should you answer "yes" or "no"?

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Before you understand how car rental companies make a profit on the insurance policies they sell, you must first understand how car rental excess works.

When you are abroad and rent a car, the car will come with basic insurance coverage. As a renter, there is usually a car rental excess that you must pay.

For example, if the car rental excess is $3,000, that means you are responsible for damages up to $3,000 to the car.

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Equally important to note is that unlike owning and driving a car in Singapore, where we can sometimes reasonably expect to pay nothing if we are not at fault for the damage (for example, another car hits us and it was caught on camera), Most car rental companies may have contracts that explicitly state that the renter is responsible for paying for damages, even if the accident was not their fault.

This provision is included for practical reasons. The car rental company cannot, or is not willing, to launch a lengthy investigation every time minor damage is found to one of their vehicles.

As a traveler enjoying their vacation in a foreign country, the last thing most Singaporeans would want to ruin their vacation is having to pay a $3,000 repair bill.

There are many things that can go wrong when driving in a foreign country. To begin with, you will not be familiar with the road you drive on in many countries, the road conditions are very different from what we are used to in Singapore.

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Also, unlike Singapore, many countries, even developed ones, are not as safe compared to Singapore and this extends to your vehicle being at risk as well. Driving a rental car also exposes you to a higher chance of committing a crime. A ding to your windshield while parked and away from your car is all it takes to be responsible for a hefty bill.

For added peace of mind, most car rental companies will offer comprehensive insurance cover, of course, at a high price. This will cover any liability you may incur due to damage to the car. Additional insurance fees are usually charged daily (eg S$30 per day). If you are renting the car for eight days, you can pay around S$240 more. This could easily increase your total car rental cost by 30-40%.

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Apart from opting for comprehensive car rental insurance, another area Singapore travelers can rely on is simply purchasing a good personal travel insurance policy.

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A travel insurance policy would cover you in various areas such as medical emergencies, disruption to travel plans, flight delays, loss of items, theft, and yes, even excess car rental.

For example, Income provides an excess of up to $2,500 under your preferred plan. If you opt for their classic plan, coverage is up to $1,500.

In other words, if you incur damage in excess of $1,000 to a rental car, the classic plan would cover the cost to pay. If you want a higher level of protection, you can opt for the preferred plan, which covers you up to $2,500.

This might be a better (and cheaper) alternative to paying more for comprehensive rental car insurance. In addition, you also enjoy other personal travel insurance coverage.

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But this seemingly logical view leads to two main misconceptions. The first is that you should never opt for comprehensive car rental insurance coverage. The second is that if, for whatever reason, you opt for comprehensive rental car coverage, you are free from anything that happens to the car. Both points of view are not completely accurate.

To help us answer these questions, we spoke to Mr. Jimmy Tan, Technical Director of the General Insurance Association (GIA) of Singapore.

(DNS): The extra premiums to reduce car excess are notoriously expensive. At the same time, some Singaporeans may not be aware that their own travel insurance plans include optional rental vehicle excess coverage.

For drivers who intend to rent a car abroad, is this a good reason to purchase a higher level of coverage to enjoy greater excess rental vehicle coverage, which also comes with additional coverage on other areas, instead of paying more to rental car companies? to reduce excess?

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Jimmy Tan (JT): Many travel insurance policies include car rental excess coverage, either as part of the policy benefit or as optional coverage. However, there is usually a limit to coverage depending on the travel insurance plan and it can range from $500 to over $1,000.

The rental vehicle excess, on the other hand, can amount to more than $3,000. In the event of an accident, the insured may be responsible for paying the rental vehicle excess.

Before deciding whether it is necessary to purchase a comprehensive car rental deductible to reduce the difference, check the typical applicable deductible for the destination, as well as the limit of the car rental deductible under the travel insurance plan. The applicable additional premiums usually depend on the amount of the franchise.

DNS: Does having a car rental franchise mean that a driver is completely free of all liability? What are certain scenarios in which drivers may still be liable for damages, despite having reduced the excess on their rental vehicle to zero?

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JT: The rental vehicle excess only covers the excess when the insured is responsible for paying the car rental agency for damage to the rental vehicle and the insured observes the terms of the rental vehicle excess insurance and contract vehicle rental. If the policies do not cover the accident, for example in situations such as driving under the influence of alcohol or by an undeclared driver, then the insured will have to pay for these. Or if the insured has breached the conditions of the policy under the rental car excess, the excess will not be covered.

Jimmy also shared with us some additional tips that Singaporean drivers should keep in mind when renting a car abroad.

#2 Check what your travel insurance covers – Most travel insurance policies offer optional coverage for auto rental excess.

#3 Only Designated Drivers or Co-Drivers Should Drive the Car – Car rental excess coverage only applies to drivers who are registered at the time of rental. Damages caused while the vehicle is being driven by third parties will not be reimbursed.

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#4 Confirm the terms of the rental: Most policies apply to cars only, but exclude motorcycle coverage. Study the contract carefully before you leave the rental location, making sure you have checked for any optional extras.

#5 File and get your claims approved – You may need to provide copies of supporting documents to get your car rental excess claim approved, such as your car rental agreement, an incident statement, an invoice detailed repair instructions and a written notice from the rental company of the excess you must pay.

#6 Credit Card Limit – Always make sure your credit card limit covers the excess that you are responsible to the rental company for, as it could be charged for prepayment. In the event of an incident, you will need to file a claim with your travel insurer for reimbursement.

#7 Return of the rental vehicle – Some policies cover the return of the rental car to the nearest rental depot if you are hospitalized and cannot return the vehicle in person.

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#8 Car Rental Excess Variances – Keep in mind that replacement and repair costs can vary by make and model. For example, the excess for luxury vehicles or 4x4s is higher than for regular sedans.

#9 Car Insurance Policy – ​​Travelers must purchase comprehensive auto insurance for the rental vehicle during the car rental period and have adhered to all terms and conditions stipulated in the comprehensive auto insurance policy.

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