Unfortunately, motor vehicle accidents are very common in rental vehicles and confusion can arise over: who is at fault, who pays for damage, and what steps you should take immediately afterwards.
The below information covers these questions and more.
If you damage a hire car, you will most likely need to make a claim under the hire company’s insurance policy. This will usually require you to pay an excess fee regardless of fault. Hire car excess fees are generally quite high, unless you have purchased excess reduction insurance through the hire company or another provider.
There are several ways that you can minimise the excess you will have to pay, if you happen to damage a rental vehicle.
In short, it depends on the car hire company agreement. Most car rental contracts stipulate that an excess is payable regardless of whether or not you were at fault and hold you liable for any damage caused to the vehicle while it's in your possession, no matter how it happened. However, some car rental companies will agree to waive the excess if they are satisfied that you were not at fault.
Be sure to check the terms of your agreement before signing it.
If you are involved in a motor vehicle accident while driving a rental car, liability may arise from various sources. You may be liable to:
Your liability for damage to a rental car in any situation depends on the terms of the contract you signed. You may be held liable for any damage that occurs to the rental vehicle while it is in your possession. The basic cover offered by most car rental companies will have a set liability amount or excess that you will have to pay which can be up to $5,000 (sometimes more, especially if renting premium category vehicles). This is often payable whether or not the damage was your fault.
In all Australian states and territories its compulsory to have third party insurance to register a car, including rental cars. This will usually cover you for injuries caused to other people in a motor vehicle accident.
See also - What does CTP Insurance Cover?
Your liability for damage to other vehicles should be covered by your rental company’s policy. They will normally indemnify you for up to $2 to $5 million subject to payment of an excess. You may also be covered by liability insurance contained in a travel insurance policy or attached to a credit card product.
Beware of exclusions and actions that constitute a breach of your rental contract that could result in you paying much more than your agreed excess. In some circumstances, you may be fully liable for damages to your rental vehicle and loss of income to the rental company while it is being repaired.
Common contractual breaches and exclusions include:
Some policies will not cover damage to windscreens, glass, tyres, wheels, roof or underbody in any circumstances.
Before choosing a car hire company or excess reduction product read the product disclosure statement and policy thoroughly. Ask yourself the following questions to make sure the policy is right for you and that you can claim under it if you need to.
If someone is legally driving a hire car, chances are they will be insured to some extent. Most car rental companies will not allow someone to take one of their vehicles without at least basic insurance.
If there is damage to your car, this should be covered by the rental car’s insurance. If you are at fault, your third party property insurance will cover damage to the rental vehicle and the car rental company’s insurance will most likely pursue you or your insurer for repair costs.
If you or the other party are injured in the incident, you may be covered by compulsory third party insurance, which is held by all registered vehicles, including rental vehicles in Australia.
See also - What does CTP insurance cover?
1: Exchange information with the other party
Following an accident with a rental car be sure to record:
2: Report the accident to police
This can be done over the phone by calling Policelink on 131 444 or online at www.policelink.qld.gov.au by downloading and filling out a Report of Traffic Incident to Police form. You can also use the “My Crash” function on the Policelink App on your smart phone which enables you to map your exact location, record details and upload photographs of the scene.
3: Take pictures
Take detailed notes and pictures of the scene, whether or not it was your fault and no matter how it occurred. Ensure you record all damage.
4: Contact your insurer
In most cases, once you notify your insurer of the car accident and any damage that has occurred they will take it up with the car rental company or their insurer. You may need to fill out a claim form and submit all of the information that you collected from the other parties.
It’s important to get advice for your specific situation. Check if you can make a risk-free compensation claim and get free initial advice from our Principal lawyer, Greg Smith.
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