The last few years has seen an influx of new rental car and campervan hire companies opening in New Zealand. The budget end of this market has seen the highest growth and has led to many new insurance exclusion policies added to the hire agreements that have not previously been seen in the major international hire car companies.
These new insurance exclusions vary from company to company but are essentially included for the purpose of lowering the cost of insuring the companies fleet. By moving the liabilities onto the hirer, the new operators are effectively lowering their operating expenses to remain competitive in the budget market. In other words, in order to compete, hire car companies are increasingly offering reduced levels of cover or additional ‘add on’ insurances. This practice is common in the budget airline industry, charging for baggage springs to mind.
An example of this add on insurance cost is ‘Window Damage Cover’ Some companies have now excluded chips or cracks to windows and lights from the excess waiver cover also called loss waiver.
Traditionally when you take the additional excess waiver cover, you would have been exempt from any damage to the vehicle. Now depending on the hire company, you will need to purchase additional window and glass cover.
I have been told on too many occasions of travellers that have been charged one hundred dollars for the cost of repairing small windscreen chips. In all occasions they believed that the chips were present prior to the hiring of the vehicle.
New insurance exclusions that have appeared in the budget hire agreements include -
- Any damage that is caused during the fitting or use of snow chains, bike and or roof racks while the vehicles is on hire. This is interesting as most car rental and motor home hire companies offer snow chains as a optional add on feature to the rental.
- Smoking in the vehicle, or allowing any passenger to smoke in the vehicle. A cleaning charge will apply should the hirer or passengers smoke in the vehicle. A good positive health initiative that unfortunately is often hidden in the small print and is subjective to the companies discretion.
- Any damage that is a result of the vehicle being not securely locked when not in use. Once again, this exclusion is discretionary to be determined by the hire car company. With many campervan break-ins occurring at scenic locations, who is to decide if the damage done to a motor home interior is the responsibility of the hirer or the insurer?
- Continuing to drive the vehicle while any dashboard warning light is illuminated. What are you to do if this happens in a remote part of the country? You could pull over immediately as required by the insurance contract and contact the break down service if you have a cell phone or if cell phone coverage is available. Cell coverage on many state highways is almost non existent. If not, you could always abandon your vehicle and try and hitch a ride.
Roads that are excluded are usually found in all New Zealand hire car company contracts and include -
- Ball Hut Road (Mount Cook)
- Skipper Road (Queenstown)
- 90 Mile Beach (Northland)
A few new additions that have now been added to some of the new budget companies hire agreements include -
- State Highway 38 Lake Waikaremoana.
- All roads north of Colville Township on the Coromandel Peninsula.
- But more importantly – Any unsealed private roadway.
This last exclusion may for many visitors seem fair and reasonable, but in NZ we have a vast network of unsealed roads. Many of these are part of the state network so you are by definition, covered for insurance.
The issue here is, when you are accustomed to travelling on a unsealed roads, you may find yourself continuing onto a private farmers road that is the logical extension of the road you were travelling on. For example, in the Glenorchy region of the resort town of Queenstown, you may find after many kilometres of state owned gravel roads, the government paper road boundary suddenly ends. You may then unknowingly find yourself travelling on a private farm road. Many of NZ attractions are accessed this way.
Farmers are encouraged to allow access to these scenic localities and are to be complemented for their willingness of access. Car hire insurance companies will however look at any incident that arises on these roads in a differing light.
This brings me to one of the most common issue facing budget rental car customers. The cost of repair and collection.
If for example you are in need of assistance in one of these remote locations and you are deemed to have been driving on a unsealed road, then the cost of recovery or repair is born by you. This determination is once again made by the rental company.
Although budget car hire companies offer a rental rate that is often significantly cheaper that the large brands, you may find that the final cost to be a expensive surprise.