Most rental cars in New Zealand come with basic insurance included, but it carries a high excess, the amount you pay if the car is damaged, commonly several thousand dollars. You can reduce that excess by paying the company a daily fee or by relying on travel insurance that covers rental excess. Either way, a refundable bond is held on your card at pickup to cover the excess. Here is how it all fits together.

What insurance comes with a New Zealand rental?

Rentals usually include a Collision Damage Waiver (CDW), sometimes called Loss Damage Waiver when theft is included. This limits your liability for damage to the rental vehicle, but only down to the excess, not to zero. CDW is typically built into the rate when you book; the cover does not remove your responsibility for the excess if something goes wrong.

What is the excess?

The excess (also called the deductible) is the amount you pay before your insurance coverage kicks in. Under basic cover, it is high, commonly around $3,000 to $6,000, depending on the vehicle and company. You can reduce it, for a price:

Cover option

Typical excess

Extra daily cost

Basic cover (included)

High (around $3,000–$6,000)

$0

Company excess reduction

Reduced (often to a few hundred dollars, or nil)

~$20–$45/day

Travel / standalone excess insurance

You claim the excess back

Varies, often cheaper overall

Figures vary widely, so treat these as a guide and confirm the numbers for your booking.

What is a bond, and how much is it?

A bond is a refundable security amount held on your credit or debit card at pickup, typically covering the excess. It is released upon your return of the car without issue. In New Zealand, the bond is commonly $500 or $1,500, depending on the vehicle (Rental Cars 247 uses these amounts and does not accept cash bonds). For example, if you rent a compact car with a $500 excess, the company will hold $500 on your card at pickup; if you return the vehicle without any damage, this amount is released back to you. The bond is separate from the rental cost. If you are not using a credit card, see our guide to renting without one.

Reducing the excess: company cover or travel insurance?

You have two main ways to lower your risk. The first is the rental company’s excess-reduction product, paid per day at the counter or when you book. The second is a comprehensive travel insurance policy (or a standalone rental-excess policy) that covers the excess. Consumer NZ advises that travel insurance is usually the cheaper option, with one catch: if you have an incident, you pay the excess up front and then claim it back, so you need the funds available at the time.

What is often not covered

Even with cover in place, some damage is commonly excluded unless you have a higher tier or specific add-on. Exclusions vary by company but often include:

  • For example, exclusions often apply to windscreen repairs resulting from stone chips, replacement of broken side windows, punctures or blowouts to tyres, damage to the vehicle’s undercarriage from striking curbs or rocks, and overhead damage such as dents caused by driving into low clearances.
  • Damage from driving on unsealed or restricted roads, or through water (fords, flooding).
  • Single-vehicle incidents, key loss, and lost-use or towing fees.

Always read what is and is not included. The official Consumer Protection guidance on renting cars is a good plain-English reference, and notes that any car you rent must be of acceptable quality under the Consumer Guarantees Act.

Tips before you sign

  • Get the total cost, including basic and any excess cover and the bond amount.
  • Inspect the car and document existing damage in writing, with photos.
  • Confirm who is allowed to drive and whether extra drivers cost more.
  • Check the fuel and return conditions, and what counts as a covered incident.

For where insurance fits in your overall budget, see how much it costs to rent a car in New Zealand and our tips to save money on car hire.

Frequently asked questions

Do rental cars in New Zealand come with insurance?

Yes, the basic Collision Damage Waiver is normally included; however, it has a high excess. You can reduce these excess costs by purchasing an excess-reduction product from the rental company or by using travel insurance that covers rental car excess.

How much is the excess on a rental car in NZ?

Under basic cover, it is typically around $3,000 to $6,000, depending on the vehicle and company. Excess-reduction products lower it for a daily fee.

Is rental excess insurance worth it, or should I use travel insurance?

Consumer NZ advises that comprehensive travel insurance covering rental excess is usually cheaper than the company’s daily fee, as long as you can pay the excess up front and claim it back.

How much is the bond, and is it refundable?

The bond is refundable and typically $500 or $ ,1,500, depending on the vehicle. It is held on your card at pickup and released after you return the car without issue.

What is not covered by basic rental insurance?

Often, windscreens, tyres, undercarriage, water damage and unsealed-road damage, among others. Exclusions vary, so check the specific policy.

Resources

  • Consumer Protection (govt) — renting cars and your rights
  • Consumer NZ — reducing your rental car excess
  • NZTA — driving in New Zealand for visitors