Originally Posted by
jackal
I always found this interesting. It seems to me that you're getting less for more. In the U.S., it costs ~$20/day to provide effectively $30,000 (or whatever) in coverage. In Australia, since all but ~$3,000 is already covered, that same $20/day more or less only "buys" you $3,000 in coverage. And with many companies, that still leaves you responsible for a ~$300 excess. It just seems like a bad deal compared to the way it works in the U.S. "Excess reduction cover" should be lower cost in Australia than full CDW in the U.S.
You're right - it's just a way for the car hire companies to get around the consumer protection legislation in Australia, I suspect, i.e. make the excess high enough that it forces most people to purchase the excess reduction, at the same cost as full CDW in the US, thereby earning the same revenue!
Most car hire compnies in Australia, except Avis/Budget, allow you to pay a higher excess reduction fee (typically AU$35-40/day) to reduce the excess to zero.
This appears to be one area where Australia differs from UK and Europe - there you pay one excess reduction fee to reduce the excess to zero, whereas in Australia, you either cannot reduce the excess to zero (in the case fo Avis/Budget) or have to pay a higher fee to do so (in the case of all the others)
Originally Posted by
jackal
Thanks for bringing this up and clarifying how things work in Australia. I've heard much of it before, but it's never been pieced together in one comprehensive place. I appreciate it.
Now worries! Thanks for clarifying how it works in the US.
Originally Posted by
jackal
For comparison purposes, in the U.S., legal liability, third-party property damage, and no-fault injury cover are bundled together in what is called "third-party liability."
Third-party liability is broken up into two components: property damage and bodily injury. Property damage covers damage to the third party's vehicle, and bodily injury covers medical bills as well as other costs such as lost income and other things the third party may sue you for. Third-party policy coverage limits in the U.S. are expressed as ##/##/##--bodily injury per person, bodily injury total per accident, and property damage total per accident, measured in thousands. For example, I have a 100/300/100 policy, meaning my policy will pay out $100,000 per person (in the third-party vehicle) up to $300,000 total and cover $100,000 in property damage. State minimums in Alaska are 50/100/25, which is higher than most other states (California and Pennsylvania are 15/30/5). If the damage exceeds my policy limits, then I am personally responsible for the rest, so people with a lot of assets tend to have higher coverage limits or significant umbrella policies.
On a related note, third-party liability purchased from rental companies in the U.S. has a $1m aggregate limit (no restriction on per person or property damage--just a total $1m maximum payout), so it can still be of value to people concerned about risk to their assets.
No type of insurance is included in the vehicle registration cost, but most (all?) states require vehicles to be covered with a third-party liability policy. Of course, it is technically possible to register a car and drive without insurance, and many times, people who are driving on suspended licenses (after a drunk driving conviction) will often be driving without insurance, since they cannot legitimately obtain such coverage.
To further clarify the situation in Australia, technically there is no insurance included in the vehicle registration fee - in practice most states have a government or semi-government body which provides the no fault injury insurance (commonly called Compulsory Third Party [CTP] insurance, although it only covers injury, not property damage) and levies an insurance charge in additon to the registration cost, but it is not possible to only pay the registration fee and not the insurance. Some states do not have a government body which provides the injury insurance - it must be obtained from private insurance companies (only a few provide it and it is highly regulated) and your car cannot be registered without it. It is still possible to be hit by a driver whose car does not have compulsory third party injury insurance, if the registration fee and insurance have not been paid, but given everyone is covered by no fault injury insurance, you will still be covered (for injury), as will they, even if their car is unregistered!
In the case of private vehicles, your comprehensive car insurance provides cover for damage to your car or theft, plus legal lilability for third party property damage. Legal liability limit is usually $5M, $10 or $20M. The excess for this type of policy is usually approx. AU$500, but can be reduced or increased. Third party property damage only policies are also avaialble. Unfortunately, none of these policies include cover for leisure rentals (they do sometimes cover rental when you're is being repaired or has been stolen).
With regard to the $1M third party liability you can purchase from US car rental companies - this amount seems quite low!
Originally Posted by
jackal
In the U.S., basic third-party liability only covers damages to third parties--no coverage for people in your car or your own vehicle. Therefore, if you are hit by someone driving (illegally) without insurance or by someone with extremely low coverage limits (say, state minimums only), you will get nothing--unless you purchase another product known as uninsured/underinsured motorist protection.
Thanks for pointing this out. I am in the process of arranging a hire car from SFO for 3 weeks next month, so I'll make sure it is included.
Originally Posted by
jackal
Australian cards don't need to include CDW for Australian or European rentals--as long as they DO provide excess reduction cover. Is that ubiquitous among credit cards over there?
No, it's not. For Australian rentals, as far as I am aware, the cards issued by two banks provide it - one only on platinum cards at no additonal cost (covers AU$5,500 excess with zero excess) and one on all cards at an additional cost of AU$24 p.a. (covers AU$2,400 excess with AU$350 excess). Other than that, I believe Amercian Express offers it on either a platinum charge card or platinum credit card and Citibank may also offer it on platinum cards. I'm not aware of any others.
For overseas rentals, most gold and platinum cards provide excess cover, of amounts varying from approx. AU $2-5,000 at no additional cost.
Before I forget, your Autoslash website is fantastic! Not much use for us Aussies though, as it appears that we get lower rates than US residents! At least, with hertz that is the case.