New Zealand Rental Car Insurance: Explained!

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A Simple Guide to Car Rental Insurance in New Zealand

Comparing car rental companies is about as fun as a colourblind person playing Twister. The most confusing part is when you get onto the car rental insurance. Not only are the technical insurance terms thrown around, but you also have to figure out what is actually covered in car rental insurance. Because, yes, not everything that you would expect is covered and not all rental companies cover the same thing. This means diving into the Terms & Conditions of your rental company and nobody wants to do that! Nevertheless, since you have to do it anyway, we’ve put together this simple guide to New Zealand car rental insurance so you know what to look for when comparing car rental insurance.

Offering basic insurance is a mandatory requirement for New Zealand car rental companies, but there isn’t really a standard of what that insurance includes. This guide will help you understand what to look for.

What Insurance Options Do New Zealand Car Rental Companies Offer?

When you go through the process of booking your rental car for New Zealand, you’ll notice that you’ll have three or even four insurance options to choose from. They may be named something like “Bronze”, “Silver” and “Gold” or “Basic” and “Premium” or something fun like “Risk-Taker”, “Chance-It” and “Stress-Free” as is the case with Jucy Rentals. But what’s the difference?

Reducing Excess

For most companies, the difference between these insurance options is the amount of “excess” you would pay in case you had to make a claim. Excess, or you might know it as a “deductible”, is the first amount payable by you in the event of making an insurance claim. After you have paid the excess, the rest of the claim would be paid by the insurance company.

The different insurance options offered by car rental companies allow you to choose a more manageable excess in exchange for a daily rate, for example, reducing an excess of NZ$3,000 down to NZ$250 when you pay NZ$25 per day.

More Cover

Some, but all, rental companies may include a policy with extra cover in their more premium insurance options, such as windscreen and tyre cover. This extra cover is usually clearly stated when selecting your insurance option (as the rental companies are going to use it as a selling point for their more premium packages).

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How Much Does Rental Car Insurance Cost with Car Rental Companies?

New Zealand car rental companies usually present their car insurance options as a daily rate. This will be added onto the base rate of your car rental.

All car rental companies in New Zealand include standard insurance with their base car rental for free (it is a legal requirement). You have the option to upgrade your car insurance in order to reduce the excess amount for a daily rate. This daily rate usually ranges between NZ$15 to NZ$30 per day (expect to pay more for campervan and motorhome rentals). A NZ$15 per day add-on will usually reduce your excess amount by half and around NZ$25-$30 would usually give you zero excess to pay.

Compare insurance add-ons and excess deductions in the following car rental comparison articles:

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What’s Included in the Car Rental Cover?

Well, this is the thing. This is where all car rental companies are different. The basic car rental insurance in New Zealand is usually referred to as:

  • CDW short for “Collision Damage Waiver” meaning it provides cover in the event of a collision or damage.
  • LDW short for “Loss Damage Waiver” meaning it provides cover in the event of theft or loss of use of the vehicle.

What this actually covers is different for every company so this is where you’ll need to read the fine print. Read your chosen car rental companies’ Terms & Conditions and FAQ pages on their websites where anything that is not covered is usually made pretty clear. If it’s not clear, contact the rental company directly to see what is covered.

Things That Might Not be Covered

Typically there are a few things that will not be covered by the car rental company’s insurance, which you will be liable (responsible) to pay for. These things usually include:

  • Towing
  • Administration fees
  • Loss of use fees
  • Windscreen damage
  • Tyre damage
  • Roof damage
  • Undercarriage damage
  • Single vehicle rollover incidents

Third-party Insurance

Car insurance is not compulsory to drive on New Zealand roads. Therefore, it’s not a requirement for New Zealand car rental companies to offer third-party insurance (covering other people, vehicles and property in an accident that was deemed your fault). Note that injuries are usually covered by New Zealand’s universal cover, the ACC, however, if you want full third-party cover you should purchase this separately to your car rental.

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What Other Ways Can You Get Your Car Rental Covered?

As you can see from the above section, your chosen car rental company may not cover everything that you want. There are other ways to “fill the gaps” in your car rental cover that you may want to consider:

Insurance From Your Credit Card

More premium credit cards are likely to cover collision or loss damage to the rental car similar to what car rental company insurance offers. Your credit card may cover some little added extras like administration fees and loss of use fees, so it’s worth investigating. However, credit cards don’t usually cover you for liability i.e. personal injury or property damage you cause.

Making a claim with your credit card insurance is another thing. You rely on the car rental company to be willing to hand over record logs of their fleet when it comes to “loss of use” claims. Like with any type of insurance, it’s likely there will be a few hurdles to jump and other parties to rely on.

Travel Insurance

Many travel insurances offer car rental insurance as an add-on. This may work out cheaper than the daily rate charged to reduce the excess by car rental companies. It may also include other damage not included in the car rental company’s insurance policies. It’s worth having a look!

Dedicated Car Rental Insurance

There are many insurance companies out there that offer comprehensive insurance on your rental car no matter where you are in the world. This will no doubt give you more cover than any basic car rental insurance offered by a car rental company, so if you want to be fully covered and have full peace of mind, getting a separate car rental insurance would be the way to go. However, you will no doubt have to pay big for this privilege, which begs the question: is car rental insurance worth it?

Your Existing Car Insurance

If your current car is already insured, should it be in New Zealand if you own a car there, or back in your home country, your insurance usually does not apply to a rental car. Rental car insurances is a separate item from your rental car insurance.


Robin C.

This article was reviewed and published by Robin, the co-founder of NZ Pocket Guide. He has lived, worked and travelled across 16 different countries before calling New Zealand home. He has now spent over a decade in the New Zealand tourism industry, clocking in more than 600 activities across the country. He is passionate about sharing those experiences and advice on NZ Pocket Guide and its YouTube channel. Robin is also the co-founder of several other South Pacific travel guides.

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