Car insurance question

[Monoriu]

When we rented a car in Australia, the car rental people kept telling me to buy "additional insurance" that would reduce my "excess".  They threatened that if I didn't do so, I would be charged something like US$2-3k if I got involved in any accident, regardless of fault.  I have absolutely no idea what "excess" is.  But I refused their sales pitch anyway, for no other reason than "if someone sells it to me, it is a bad deal."

Can someone explain the whole deal to me?  What is "excess" in the insurance sense? 

[Weatherman]

I know when I've rented a car they offer flood/hail insurance.

[CountDeMoney]

Can someone explain the whole deal to me?  What is "excess" in the insurance sense?

It means that, if you're like every other Chinaman in the world, you can't drive for shit.

[DGuller]

Excess in this context is another word for deductible (and a pretty stupid one at that, as normally excess in insurance means something close to opposite).  They were offering to reduce your deductible for a price.

[dps]

Excess in this context is another word for deductible (and a pretty stupid one at that, as normally excess in insurance means something close to opposite).  They were offering to reduce your deductible for a price.

Which is generally a bad idea.  Usually, with any type of insurance, you're best off IMO to take the highest deductible that you can.  There may be special circumstances in which you'd want to decrease your deductible, but not normally.

[DGuller]

Which is generally a bad idea.  Usually, with any type of insurance, you're best off IMO to take the highest deductible that you can.  There may be special circumstances in which you'd want to decrease your deductible, but not normally.

That is the truth.  Unless you're offered heavily subsidized insurance or a freebie, it is most prudent to only insure against losses or portions of losses that you can't easily cover yourself.  It also goes for extended warranties.

[crazy canuck]

It is definitely not a bad idea when renting a car.  It is a bad idea when insuring your own car.

With your own car you can live with scratches and scrapes here and there that accumulate over time.  Rental car companies will charge you for the repair of that.  I always pay the small premium to avoid any headaches when returning the car to the rental company.

[Scipio]

American car rental insurance is a must-buy.  It's cheap, and you can basically total the car.

[Admiral Yi]

American car rental insurance is a must-buy.  It's cheap, and you can basically total the car.

If DGuller is right you can already total the car without the excess and you're still only out the deductible.  So which is it?

I've always declined the coverage because I heard so many times that it's ridiculously overpriced.

[PRC]

If you already own a car and have regular car insurance on it - that will cover the insurance on any car you may have to rent - you only have to pay the deductible.

[crazy canuck]

If you already own a car and have regular car insurance on it - that will cover the insurance on any car you may have to rent - you only have to pay the deductible.

Right, what you are paying for is the right to drop off the car no matter what the condition might be.  For me it is worth not having the hassle if someone hits me while I am driving a rental car (or just dings me in a parking lot).  It isnt that much to have the peace of mind - which after all is what insurance is for especially when you are travelling in a foriegn country.

[crazy canuck]

I've always declined the coverage because I heard so many times that it's ridiculously overpriced.

I havent noticed it being much.  What do you consider overpriced?

[Admiral Yi]

I havent noticed it being much.  What do you consider overpriced?

Significantly more than is actuarially fair.

[DGuller]

I havent noticed it being much.  What do you consider overpriced?

Significantly more than is actuarially fair.

And with that answer you're qualified to become an actuary. 

[DGuller]

I've always declined the coverage because I heard so many times that it's ridiculously overpriced.

I havent noticed it being much.  What do you consider overpriced?

When I rented Chevy Cobalt from Enterprise for a day, my insurance costs amounted to $30.  Since I didn't have a car yet (in fact I was renting one to drive to dealerships), I didn't have my own auto policy, so I had to bend over and take it.  That $30 a day for a crappy Cobalt means $900 a month, or $5400 for 6 months.  As a comparison, I pay $650 for 6 months for my own car insurance now, in the same area and for a similar type of car.  Do the math.