Do You Need Travel Insurance for Self-drive Tour? 4 Things You Should Know Before Purchasing Car Rental Insurance!

Self-drive tour is an excellent way to immerse yourself in the beauty and culture of a new country at your own pace, in your own way. However, if you’re planning a self-drive tour for the first time, what are the things that you need to keep in mind before hitting the road? Is travel insurance even necessary for your trip? Here’s everything you need to know for planning a self-drive safari!

Rental car insurance vs travel insurance: what’s the difference?

Here’s a common misconception about self-drive tour coverage: “When I book a car, the rental has already covered the cost of insurance, so I don’t need to buy an extra travel insurance for the trip”.

But when accidents do happen, people often realize that the basic coverage of rental car insurance can only cover a portion of the repair cost. Not only will you need to pay the rest of the repair costs, but you also need to pay your own medical bills out of your own pocket. Why is that?

What is “deductible”? How much do you need to pay?

In fact, rental car insurance only provides a basic level of coverage required by the law, it also comes with a high deductible that you need to pay. What that means is that when the policyholder submits a claim, he/she needs to pay a specific amount of money before the insurer makes reimbursement.

For instance, if you hit a traffic light in a car accident and you need to pay $10,000 for the repair cost. Let’s say you have a $5,000 deductible with your rental car insurance. In this case, you will have to pay the initial $5,000 to the insurer. Only after that, the rental car insurance will pick up the remaining tab.

The amount of deductible the insured has to pay is typically mentioned in the policy document, which varies significantly from one plan to another. That’s why before renting a car, you should always take such factors into consideration.

What insurance do you need for self-drive tour?

At this point, you may have already noticed: rental car insurance does not cover any medical expenses, property loss, or even third-party liability! So what should you do if you want to minimize the risks of accidents when self-driving?

Third-party liability insurance

Since travel insurance does not cover third-party liability, you should always make sure whether the rental agreement has already included third-party liability coverage in its terms and conditions. Sometimes you will need to pay extra to include liability protection in the coverage. Besides, the sum insured can vary depending on the level of policy you choose to buy, therefore it’s crucial to pay attention to the terms and conditions and compare different plans before making a decision.

However, most rental car insurance typically has a very high deductible. If the cost of damage exceeds the limit of insurance coverage, you will be liable to pay a significant portion of the compensation fees. Which is another good reason why you should opt for travel insurance if you want to minimize financial losses when things go wrong.

Travel insurance

Travel insurance normally comes with "rental vehicle excess cover", which is designed to protect you against any excess that you are liable to pay if your rental car is damaged. In addition, if you need any emergency medical care after a car accident, travel insurance can also reimburse you for the related expenses, which are the areas that typical rental car insurance cannot cover.

Case study: what if you have an accident in your rental car? 

For example, Mr. Chan and his family were involved in a car accident. The collision caused both damage to the vehicle and injuries to Mr. Chan’s wife, who was taken to the hospital after the car crash. In this case, if the cost of repairing the car is $10,000 and the rental car insurance policy has a deductible of $5,000, Mr. Chan would be responsible for paying the initial $5,000 out of pocket. The rental car company would then cover the remaining amount. However, since Mr. Chan purchased travel insurance for his trip, which includes "rental vehicle excess coverage" of $6,000, he wouldn't have to pay anything out of pocket for the repairs. As for his wife's hospitalization and medical bills, travel insurance can also help cover these additional expenses.

Furthermore, if the car is stolen or damaged, some rental car companies may even seek compensation for non-operation charge (NOC) from the policyholder. If you get stuck in traffic and can’t return the car on time, you may also need to pay an extra fee for returning your hire car later than expected.

Zurich’s “Breezy Travel” insurance plan offers optional coverage for road trips that can specifically provide coverage for these unexpected expenses. In addition to covering rental car deductible, our travel insurance plan can also reimburse you for the NOC, emergency roadside assistance cost, and relocation cost if you’re unable to return the rental vehicle to the designated place stated on the rental agreement due to interruption of the trip.

More importantly, travel insurance offers a wide range of coverage that goes beyond just road trips, including medical expenses, loss of personal belongings and properties, trip cancellation and travel delay.

4 things to check before renting a car

1. Check the car thoroughly

When picking up a car, take your time to walk around the car and look inside carefully to see if there are any unusual wear and tear, scratches, and dents. It’s also a good idea to bring a camera with you to capture the existing condition of your rental car. If you notice any pre-existing damage, remember to inform the staff immediately to prevent disputes and getting unfairly charged.

2. Learn the rules of the road

Every country has its own driving rules and regulations, so make sure to do your research and learn the rules of the road and traffic laws when you travel to a different country. And since Hong Kong drives on the left with steering wheel on the right, so if you go to countries that drive on the right (such as mainland China, Taiwan, Europe, Canada), you should have sufficient driving experience and acclimate yourself to the local driving laws and customs.

3. Apply for an International Driving Permit

If you want to rent a car abroad, you must hold a valid International Driving Permit (IDP). You can apply directly via the GovHK website or submit your application in person to the Transport Department. IDP is only valid for one year from the date of issue, which must be renewed after expiration. Also, keep in mind that probationary driving license (P-plate) holders are not eligible to apply for IDP.

4. Pay attention to exclusion clauses

Last but not least, you should always have a clear understanding of the common exclusions and be aware of the things that your insurance policy won’t cover. Generally speaking, insurance companies would not cover any reckless driving, which includes ignoring traffic signals, speeding, driving under the influence of drink or drugs, and so forth. Remember, the onus is on you to drive safely and responsibly, especially if you’re driving on a road trip in a foreign country.

Tips on making claims

If you unfortunately have an accident during your self-tour trip, remember to collect all the required documents to support your claim. These include medical records, letter of hospital admission, auto repair invoice, police report, and so on. Another thing to keep in mind is that most insurance policies will have a time limit for lodging a claim, which must be made within 21 to 30 days from the date of incident. So be sure to submit your claim as soon as possible!

For more information on the claims process, required documents, and procedures, please refer to our claims page.