Although car hire companies provide a valuable service to millions of tourists and Australian citizens each year, there are certain aspects that need to be considered before paying for a rental vehicle. Car companies are known for offering additional luxuries and options upon checkout, many of which are not adequately explained to the customer. Perhaps one of the most expensive optional extras included with car hire is rental excess, also known as excess reduction insurance, and it is excess reduction that has recently been in the cross hairs of consumer group Choice.

Various car companies have begun offering excess reduction, which is a type of insurance that provides coverage for liabilities or excessive damage amounts that are not covered by the driver's existing insurance plan or the basic coverage included with the car hire. Car rental excess insurance is offered by insurance companies, credit card issuers (the coverage is activated when car hire is purchase with the card), and car hire companies.

Excess reduction coverage reduces the amount of excess liability that the driver is responsible for in the event of an accident that causes damages which exceed the coverage capabilities of the insurance policy included with the car hire service or that of the driver's personal insurance policy. Excess reduction also covers types of damages that are often excluded in a conventional insurance policy, such as damage to the interior, undercarriage, windscreens, tires, or roof of the vehicle.

Excess reduction insurance can cost as much as forty dollars per day, however some people question whether this expense is worth the value it provides because the driver may still be responsible for several hundred dollars in liability. While car rental excess can provide valuable supplemental coverage in some cases, it is important to thoroughly review the terms and conditions of the policy to ensure it is worth its cost and/or necessary before opting in.