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Is it necessary to buy rental car insurance in NZ in 2025?

Is it necessary to buy rental car insurance in NZ in 2025?

1 May 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.