Over the last 4 years there has been the sprouting of a new category in Australia in the car insurance – car rental industry, that of car rental excess insurance.
Initiated by Des and Steve Sherlock of Tripcover, at the start of 2012, it now includes some 5 players in the Australian market. They inlcude:
- Tripcover – Car Rental Excess Insurance
- Allianz Rental Vehicle Excess Cover
- Hiccup
- Rental Cover
- Car Trawler
This category has the potential to eat into the large profits that the car rental companies have been enjoying for decades. What is different about this category is that unlike using
travel insurance or credit cards to hope you are covered for what you think you should be covered for, this car rental excess insurance is designed specifically for competing head to head with the car rental companies.
The main difference between the insurance product and the car rental companys’ product, is that in the event of an accident you would need to claim with the insurers such as Allianz Global Assistance, QBE, whereas if you use the more expensive car rental companies waiver (CDW) they handle any damage issues.
And by expensive we mean very expensive. The car rental companies waiver can cost as much if not more than the rental per day with the car rental excess insurance supplied by Tripcover coming in as low as $5.60 per day.
The category has seen amazing growth over the last 4 years with estimates that some
$12M in sales in the last financial year, from these companies. This represents about 200,000 policies sold out of 6.5M rentals in Australia per year or around of 3% of the market so far.
It is predicted that by 2020 the car rental excess insurance market in Australia will be 10% of the car rental market, worth $38M.