Understand Excess Reduction in Car Rental

You may or may not know about this excess reduction in car rental every time when you are travelling. In fact, a lot of people misunderstand that this in an insurance and I'm confused myself too when first I started renting car here in Australia.

In fact, this is NOT an insurance at all but maybe it can be related to insurance. For example, if you don't pay for this excess reduction, you're still insured. In case of anything happens, the maximum amount that you need to pay is $4K. No matter what happen, you won't pay more than $4K. Isn't this already covered?

You pay this excess reduction fee to reduce the $4K to $500 for example. So, in case of anything happens, you won't pay more than $500. You can also pay this access reduction fee higher to reduce the $4K to $0 so that you won't pay a single cents.

There is a catch here, you still won't be covered although you have reduce to excess to $0. For example, you break the rental contract by driving in the unsealed road.  This depends on whether there is such limitation on the contract and also depends on place that you rent a car. We have such limitation while renting a car in Tasmania. They usually will explain that to you clearly.

Another common thing is you don't drive the car but let other to drive. It depends on you contract whether you have added another person to drive the car or only you're the only one can drive the the car. Also, violating traffic laws is another common one which causes you break the contract.

Should you pay for this excess reduction? It is really up to you. What you should ask yourself is if there is any major accidental happens, are you afford to pay $4k? If yes, you don't need to pay any excess reduction fee. I personally have never paid for it. Most importantly, don't "assume" this excess reduction is an insurance fee, it is NOT. You have already been covered although you don't pay it!