Is it necessary to buy rental car insurance in NZ in 2025?
When you rent a car in New Zealand and sign the rental agreement, the agent at the counter will almost always ask: “Would you like to add insurance to your booking?” For many travellers, this can cause a moment of hesitation. Are you covered already? Is this extra cost worth it? Will your credit card insurance be enough? Or is it a money trap that most drivers can skip?
Sorting out what’s actually necessary, what’s optional, and what’s downright redundant isn’t always obvious. Rental car insurance can be a real head-scratcher, especially with so many types of cover on offer and so many rental companies doing things differently.
Let’s break down what you actually need to know about rental car insurance in New Zealand, why companies like Yes Rentals handle things differently, and the real risks of driving uninsured on Kiwi roads.
What Insurance Is Included in a New Zealand Rental Car
Every rental car company operating in New Zealand is legally required to provide basic insurance with every rental. But “basic” can mean pretty minimal coverage, with some surprisingly high excess (the amount you have to pay in case of an accident or damage).
Here’s what’s typically included, no matter who you book with:
Third-party insurance: Covers damage you might cause to other vehicles or property
Collision damage waiver (CDW): Reduces your financial liability but almost always comes with a significant excess
Theft protection: Covers if the vehicle is stolen, again usually with a chunky excess
If you choose not to add any extra insurance and you have an accident, you’ll have to pay that excess out of your own pocket. It’s not uncommon to see standard excess amounts between $3,000 and $5,000, depending on the size and class of your rental.
What Extra Insurance Options Are Usually Offered?
Rental companies will give you a menu of add-on insurance options. This usually includes:
Excess reduction/waiver: Cuts the excess to zero or a much lower amount if something goes wrong
Windscreen and tyre cover: Pays for chips, cracks and punctures
Roadside assistance: Covers lockouts, flat batteries, wrong fuel and other mishaps
Personal accident insurance: Provides medical cover for you and your passengers
It can feel like a lot of upselling. But it’s not all about the rental agency making an extra buck. Cars frequently pick up windscreen and tyre damage on gravel roads, and even a small bingle in a busy city carpark can lead to a claim that’ll eat your bond, making rental car insurance a consideration for added protection.
When You Might Already Be Covered
Before adding rental insurance, ask yourself:
Does your travel insurance policy include rental car excess cover?
Does your credit card provide rental vehicle coverage if you pay for the hire on it?
Will your own car insurance extend to rentals (rare in NZ, but possible for Kiwis)?
Check the fine print. A lot of travel insurance excess policies only pay you back when you’ve already paid the rental company. In other words, you’ll cough up at the desk then wait weeks or months for reimbursement. They also often don’t cover damage to glass, tyres, or the car’s underbody.
Credit card insurance nearly always requires you to decline all extra options at the rental agency — and coverage limits may not match the rental company’s hefty excess.
Should You Take the Rental Company’s Insurance?
It sounds like a broken record, but “it depends”. Here are a few scenarios:
Situation | Should You Take Extra Cover? | Why? |
Relying only on travel insurance | Maybe, but expect to pay upfront and claim back | Could be slow and doesn’t cover everything |
Using your credit card as insurance | Maybe, but beware of payout limits/exclusions | Rarely matches actual excess or full damage |
Exploring gravel/remote roads | Almost always a yes | Windscreen/tyre damage much more likely |
Only visiting cities/short trips | Might be comfortable with higher excess | Risk of damage is lower, but not zero |
Wanting maximum peace of mind | Take the rental company’s insurance options | No out-of-pocket surprises |
Why Excess Reduction Is The Big Seller
The number one add-on Kiwis and international visitors take is the excess reduction option. While it looks expensive, it usually takes the excess all the way down to nil or to just a couple of hundred dollars.
This can be huge if you’re renting for a few weeks and don’t want thousands locked on your credit card as a deposit, or the risk of losing a stack of money on a stray rock. Remember, even when an accident isn’t your fault, a rental company can deduct the full excess until they’ve recovered costs.
What Makes Yes Rentals Different?
Yes Rentals, a fast-growing car hire brand found in hot-spots like Auckland, Christchurch, and Queenstown, has set itself apart by stripping back hidden charges and giving crystal-clear cover choices to their drivers. Here’s how their approach stands out:
Transparent pricing: No sneaky bonds, admin or “inspection” fees
Unlimited kilometres: No surprises if your plans change
Free cancellation: Travellers can book flexibly, with no penalty
All essential insurance included: No rental leaves the lot without liability cover and protection against third-party damage
Simple excess reduction: Clear, affordable daily rates to reduce your excess to zero
No pushy upselling: Yes Rentals staff don’t hard-sell; you add—not the counter clerk
Yes Rentals also stands out for its commitment to sustainability. Their modern fleet includes hybrids and EVs, so if you’re keen to reduce your travel footprint, you can hire greener wheels without paying over the odds.
Real Risks: What If You Skip Insurance?
Picture yourself reversing in a crowded Queenstown carpark. You misjudge the distance, tap another car, and leave a bit of a dent. The damage bill? $1,800. If you decided against any extra cover, the rental company is well within their rights to charge this straight to your credit card, up to the excess limit.
Now imagine picking up a chip on a gravel rural road. No other car involved, but a cracked windscreen needs replacing — easily $500 to $900. Not all basic policies include this. Likewise, if you bottom out the car on a poorly maintained track, damage to the underbody could add up fast.
Those are common, real-life scenarios in New Zealand. Windscreen and tyre damage, carpark knocks, and minor collisions happen every single day.
Travelling with Mates, Kids, or Expensive Gear? Risks Add Up
If you’re carrying a car full of friends or are lugging around sports gear (think surfboards or bikes), it’s worth considering the implications if something goes wrong. Splitting costs after a claim isn’t always pretty, and wrangling insurance paperwork between lots of drivers gets messy.
With Yes Rentals, each additional driver is registered and covered, keeping things simple and above board compared to some companies that charge extra (or even void claims if someone not on the paperwork is driving).
Comparison: Yes Rentals vs. The Big Names
How does Yes Rentals stack up next to the usual suspects (think Avis, Hertz, Europcar, etc.)? Here’s a snapshot:
Feature | Yes Rentals | Major Brands |
Basic Insurance | Included as standard | Included, but often stricter T&Cs |
Excess Amount | Clear, can reduce to $0 | Sometimes can’t be reduced fully |
Transparent Pricing | Yes, with no hidden extras | Hidden charges (admin, cleaning fees etc,.) |
Flexibility | Free cancellations, easy date changes | Can charge for changes/cancellations |
Hybrids/EVs Available | Modern, environmentally friendly options | Sometimes only on premium plans |
24/7 Emergency Support | Yes | Yes, but sometimes with fees attached |
Social/Charity Focus | Donations to children’s charities | Rarely disclosed |
Top Reasons People Skip the Extra Cover (And Why They Regret It)
Trying to save money: The daily rate looks cheaper with zero add-ons. But one accident undoes all that “saving.”
Trust in credit card/travel insurance: These are often less reliable than you think.
Not planning to go far: Even short urban rentals lead to claims.
Feeling lucky: Accidents and damage are just as common here as anywhere in the world, maybe more given the number of tourists and unpredictable weather.
Insurance for Unusual Rentals: SUVs, Vans, Minibuses
Hiring something other than a standard sedan? Big groups, sports teams, or families often drive vans or people-movers. These vehicles can cost more to repair and are trickier to park, so risks are slightly elevated.
Yes Rentals maintains a broad fleet, and the same simple insurance options apply whether you’re in a compact hybrid, SUV, or 12-seater minibus. Mainstream companies sometimes ramp up the excess on larger vehicles or limit the roads you’re allowed to drive.
Fine Print: What’s Actually Excluded
It’s essential to know that no rental insurance in New Zealand covers everything. Here are things often left out:
Driving on unauthorised roads (beaches, riverbeds, off-road tracks)
Reckless or drunk driving
Damaged caused to roof, underbody if driving outside allowed areas
Lost keys or personal items stolen from the car
Always scan the exclusions before you sign. Yes Rentals is upfront about these, and staff will answer any specific road/route questions you have in advance.
Tips for Getting the Best Deal and Cover
Book directly on the rental company’s website to dodge third-party agency booking fees
Read the insurance options carefully and choose what matches your appetite for risk
Always declare all drivers upfront so they’re covered
Check your own travel or car insurance before departure, but don’t assume you’re set
Photograph the car (every corner!) at pick-up and return
Getting behind the wheel in New Zealand is a brilliant way to see the country, from Auckland’s urban sprawl down to remote Milford Sound. But insurance is not something to “wing”—it’s about protecting your wallet and your peace of mind.
Yes Rentals has built their business around clear, traveller-friendly insurance that takes the guesswork out of hiring a car. While it’s tempting to skip the extra daily spend, most people who pay out of pocket after a minor scrape wish they hadn’t rolled the dice.
When in doubt, aim for the option that lets you relax and enjoy the drive. Peace of mind is worth far more than a few dollars a day.