International Car Rental Insurance When You Travel Abroad

Planning a driving holiday? Don’t overlook your overseas car rental insurance, which has a different focus than your regular travel insurance plan. Here’s how these two different but complementary policies work together.

If you’re planning a driving holiday down the Gold Coast, you may be wondering if the policy you bought using a travel insurance discount, or the free one that comes with your credit card also covers you when renting a car overseas.

Generally speaking, no. A standard travel insurance plan does not cover overseas car rental. Instead, you’ll have to get separate car insurance for rentals abroad to cover the use of your rental car.

Let’s take a look at the difference between travel insurance and overseas car rental insurance to better understand why.

Table of contents

• What is the difference between travel insurance and car rental insurance for rental abroad?
• How much is car rental excess cover?
• What is car rental excess cover?
• What does rental car excess cover?
• What is the difference between car rental excess cover and overseas car rental insurance?
• How much is car rental excess cover?
• Best travel insurance with rental car excess cover
• How do I get rental car excess cover?
  • From your car rental provider
  • From your travel insurance plan
  • From third-party providers
• What are the other rental car protection types I can get?
  • Collision Damage Waiver (CDW)
  • Loss Damage Waiver (LDW)
  • Supplementary liability insurance (SLI) 
• [Bonus] Things to note about driving in West Malaysia

What is the difference between travel insurance and car rental insurance for rental abroad?

Travel insurance and overseas car insurance do have some overlap in the benefits they offer, but both of these are designed with different areas of focus. 

Standard travel insurance does not always cover rental cars since it is aimed at offering broad-based cover against the common risks of overseas travel. On the other hand, overseas car rental insurance is for the specific liabilities that drivers take on whenever they get behind the wheel while travelling abroad. In most cases, you do need some form of insurance to drive a rental car. However, the type of insurance and the extent of coverage can vary depending on your individual circumstances and location. 

As the driver, you will be liable for damages or claims should your car cause injury or loss to others, or damage to public or private property.

Furthermore, should the car you rent be stolen, lost or damaged, you will also be responsible for the cost of repairs and/or replacement of the vehicle.

Whether you’re travelling solo or with family, rental car insurance or holiday car insurance is critical for anyone planning to rent a vehicle overseas. If you are unsure of how to tell if your travel insurance covers a rental car, it is best to contact your policy provider to check before embarking on your trip.

And because travel insurance and car rental insurance while abroad ultimately have different goals, it is crucial to think of both of them separately – even if there is some overlap between the two.

What is car rental excess cover?

There’s one thing to highlight about international rental car insurance, and it’s that while having this insurance will shield you from the financial impact of a road accident, you may not be fully spared the backlash.

This is because international rental car insurance plans commonly come with excess, which is the amount you have to pay before your policy pays the rest. Insurance excess is nothing new – most motor insurance policies impose a S$100 excess charge for windscreen repairs, for instance.

However, in the case of international car rental insurance, the excess may be set at a high amount – up to several thousands, or more. If your policy comes with a high excess, you will potentially have to pay a large amount out of your own pocket, which negates the whole point of having an overseas car rental insurance plan in the first place!

This is where rental car excess cover comes in. This is an insurance benefit that reduces the amount of excess you have to pay, or waives it off completely.

With rental car excess cover, you can be compensated for the full sum of repairs or damage, or claims from injuries or loss.

Clearly, this is a crucial benefit to have when renting a car, which makes it a shame that it is not included in most international rental car insurance policies.

Instead, you’ll have to obtain your own rental car excess cover, which you can do in the following ways.

Related to this article: How Much Does It Cost To Rent A Car In Singapore?

What does rental car excess cover?

Rental car excess cover should be part of the list of travel essentials for travellers seeking comprehensive protection for renting and driving overseas.

Depending on the plan, rental car excess can cover the excess amount in case of damage or theft, and additional fees that rental companies may impose to remedy minor accidents, such as flat tyres, lost keys, and towing charges. This cover can also extend to accidental loss or damage of the rented vehicle and coverage for additional drivers listed on the agreement. To enhance your coverage and ensure that you are fully protected, it is advised to add rental excess cover to your international car rental insurance.

What is the difference between car rental excess cover and overseas car rental insurance?

Car rental excess cover and overseas car rental insurance differ primarily in their scope of protection. While overseas car rental insurance covers damages and theft of the rental vehicle, car rental excess cover specifically addresses the excess charge that insurance policies often leave to the renter.

For instance, if you're involved in an accident causing S$2,000 in damages with a S$500 excess, your excess cover would handle the S$500, while the rental insurance would take care of the remaining damages. In this scenario, if you only have overseas car rental insurance and no car rental excess cover, you would be responsible for paying the $500 excess out of pocket.

How much is car rental excess cover?

In most cases, the cost of car rental excess cover will be significantly less than the potential expense of the excess charges in case of damage or theft, offering substantial savings. Prices for car rental excess vary depending on your destination and where you purchase the cover; buying directly from the rental company might be more expensive compared to opting for a third-party insurer. Regardless of where you choose to purchase your car rental excess cover from, it will allow you to mitigate potential financial losses by paying just a fraction of what the real cost could be in the absence of excess cover.

Best travel insurance with rental car excess cover

Finding the right travel insurance that includes rental car excess cover can significantly enhance your travel experience by providing peace of mind on the road. Here are some of the best travel insurance options with comprehensive rental car excess coverage to ensure that you are well-protected against unexpected expenses, allowing you to focus on enjoying your journey.

Product	Rental vehicle excess	Medical expenses	Travel cancellations	Baggage delay	Premiums*	Apply
AIG Travel Guard® Direct - Supreme Apply Now	Up to S$1,500	Up to S$2,500,000	Up to S$15,000	Up to S$1,400	From S$68	Apply Now
Allianz Travel Insurance Platinum Plan Apply Now	Up to S$3,000	Up to S$1,000,000	Up to S$15,000	Up to S$1,400	From S$62	Apply Now
MSIG Premier Plan Apply Now	Up to S$1,500	Up to S$1,000,000	Up to S$15,000	Up to S$1,500 S$250/6h	From S$76	Apply Now
FWD First Apply Now	Up to S$1,000	Up to S$1,000,000	Up to S$15,000	Up to S$900 S$150/6h	From S$32.40	Apply Now
Tiq Travel Luxury Apply Now	Up to S$1,000 (as add-on)	Up to S$1,000,000	Up to S$10,000	Up to S$200 S$100/6h	From S$43	Apply Now
Starr TraveLead Gold Plan - Worldwide (Annual) Apply Now	Up to S$1,200	Up to S$1,000,000	Up to S$15,000	Up to S$1,200 S$100/6h	From S$40.80	Apply Now
Singlife Travel Prestige Apply Now	Up to S$2,500	Up to unlimited coverage	Up to S$20,000 Up to S$5,000 for any reason	Up to S$2,000 S$200/6h	From S$53.95	Apply Now

*Premiums based on 7-day trip to Australia

How do I get rental car excess cover?

From your car rental provider

When you’re renting a car, your rental provider will likely attempt to upsell you on rental car excess cover.

You will be offered several different add-ons that are charged separately, and you get a sneaking suspicion that you have to purchase every last one of them in order to be fully covered against any excess or additional charges.

You’d be right, for several reasons.

One, because motor insurance policies don’t actually cover the entire vehicle, leaving out some commonly damaged components like tyres and windows and sunroofs. So if you neglect to purchase the appropriate add-on, you will be liable for charges related to a damaged window or undercarriage.

Two, it also doesn't help that car rental companies attempt to nickel-and-dime you by splitting up important coverage into different add-ons.

For instance, there’s what is commonly known as a Collision Damage Waiver (CDW) that reduces your excess should your rental car get damaged in an accident.

What if your vehicle gets stolen instead?

Well, in that case you’ll need Loss Damage Waiver (LDW), which is essentially CDW + protection against theft. Without LDW, you’ll be liable for the entire amount of replacing the lost vehicle.

The takeaway here is that, yes, while your car rental provider offers excess cover, it is unlikely to be the most cost-effective option, seeing as to how you’d have to basically buy the entire suite of add-ons.

And even then, you may still not be completely off the hook; some rental companies have two “levels” of CDW/LDW, with only the more expensive option offering 100% excess waiver.

Related to this article: Best Travel Insurance Plans for Road Trips, Water Sports and Extreme Sports

From your travel insurance plan

Some cheap travel insurance plans offer rental car excess waiver, whether bundled in by default, or as a paid add-on. As its name suggests, this benefit covers you for any excess imposed by your car rental company.

Generally, any and all excess claims are covered, no matter what the originating incident is. So there’s less need for you to worry about what parts of your rental car are covered, or not.

However, this is still not a “blank-check” situation, as some restrictions may still apply. For instance, your travel policy may not cover damage to windows or tyres or some forms of damage or loss.

Also, the amount of excess waiver offered may not be large enough. For instance, FWD Travel Insurance offers S$1,000 in car rental excess waiver. If your excess exceeds this amount, you’ll have to cover the remainder on your own.

Related to this article: Driving to Malaysia? Travel Insurance May Be More Important than You Think

From third-party providers

Another option is to purchase a rental car excess cover package from a third-party provider, such as RentalCover or Worldwide Insure.

This works similarly to the rental car excess benefit provided under a travel insurance policy; it covers you for the excess on your rental car policy.

And, depending on the actual package you sign up for, you may also be covered for other charges such as damage to tyres, windows and car underbody, road rage incidents, mis-fueling the vehicle with the wrong type of fuel, etc.

The difference is that a third-party rental car excess plan may offer up to unlimited waiver of all excess and incidental charges, such that you do not have to pay extra should your rental car get damaged or stolen.

You may find that in comparison to your rental car provider, third-party rental car packages may offer better value, providing all-round cover at a lower cost.

Related to this article: Driving to Malaysia in 2023: The Ultimate One-Stop Guide

What are the other rental car protection types I can get?

When renting a car, there are several common policies available to enhance your insurance for car rentals abroad and provide you with added protection and peace of mind during your travels. Even the best travel insurance for road trips may not offer complete coverage so it is recommended to consider these additional protection types.

Collision damage waiver (CDW)

A collision damage waiver (CDW) offers comprehensive coverage for any damage to a rental car in your possession. Whether you encounter an accident while on the road or come to find your car damaged while it was parked, a CDW ensures you're not financially responsible for repairs. This waiver often includes coverage for accident-related towing fees, the rental agency's administrative fees and any lost revenue from the vehicle being unavailable for rent, known as loss of use.

Loss damage waiver (LDW)

A loss damage waiver, or LDW, enhances your car rental insurance by combining the benefits of a CDW with theft protection. This means not only are you covered for damages to the rental car, but you're also protected in the event the car is stolen during your rental period.

It's important to note, however, that neither LDW nor CDW covers damages to other vehicles or injuries resulting from an accident while abroad.

Supplementary liability insurance (SLI) 

Supplemental liability insurance (SLI) is a crucial addition to any overseas car rental insurance policy. It covers claims made by third parties for physical damage or injuries they sustain due to the rental vehicle. This coverage is vital even if the accident was not your fault, offering protection against potential financial liabilities resulting from third-party claims.

A note on driving in West Malaysia

Oh, one more thing. If all you’re doing is driving up to West Malaysia, know that you may be able to get by with the motor insurance policy you obtained for driving in Singapore.

This is because most (if not all) motor insurance plans in Singapore cover for driving not only in Singapore but within West Malaysia and a little bit into South Thailand (typically, 80 km in).

However, you need to check with your insurer if your policy still covers you when driving a rental car – some insurers may not allow this.

Having said that, it might still be a good idea to get a cheap Malaysian travel insurance and a separate international car insurance for your out-of-Singapore road trip regardless.

Why? Well, because should you inadvertently get into a fender bender on the North-South Expressway, you can use your rental car insurance to settle any claims.

Otherwise, if you only have your primary motor insurance, you’d have to take a hit on your No-Claim Discount as well as risk having your premiums increased.

Related to this article: What to Look for in a Car Insurance When Driving to Malaysia

Read these next:
Travel Insurance Guide: Five Things All Travellers Must Know
Is Travel Insurance With COVID-19 Coverage Still Necessary?
Best Travel Insurance For Travellers With Pre-Existing Conditions
Why You Should Buy Travel Insurance (And What Happens If You Don't)