What are the differences between self-drive travel insurance, travel insurance, and rental car insurance? A detailed breakdown of rental car excess.

In recent years, more and more Hong Kong residents have taken to self-driving holidays abroad, enjoying greater flexibility in planning their itineraries while exploring local attractions in depth. However, in the event of an accident, who should bear the costs and liabilities? If the car rental company already provides insurance, is there still a need to purchase travel insurance? And what does "rental car excess" mean? This article will explain each of these points in detail, helping you travel with peace of mind.

Many Hong Kong travellers mistakenly believe that self-drive travel insurance is a standalone insurance product. In fact, self-drive travel insurance is not a completely new type of insurance, but rather a combination of basic travel insurance with an additional "Rental Vehicle Excess Coverage".  

In simple terms, self-drive travel insurance is basic travel insurance plus rental vehicle excess coverage. The excess (also known as "deductible") refers to the amount that the driver is required to pay out of pocket when an accident occurs with a rented vehicle, as the insurance provided by the rental company does not cover the full compensation.  

Further reading:
Which Travel Insurance is the Best? Experts Teach You 10 Key Details to Consider
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Example of Rental Vehicle Excess Coverage Usage

Suppose you are driving in Japan and unfortunately hit a guardrail, with repair costs amounting to 80,000 HKD. The rental agreement states an excess of 30,000 HKD, and the rental vehicle excess coverage in your travel insurance is 10,000 HKD. This means you still need to pay 20,000 HKD out of pocket. Basic travel insurance does not cover this excess amount, and the core advantage of self-drive travel insurance lies in its ability to compensate for this portion of the cost.  

A common misconception is that since car rental companies already include insurance, there is no need to purchase additional self-drive coverage under travel insurance. However, the reality is far more complex. The insurance provided by car rental companies and self-drive travel insurance each have their own coverage scopes and limitations, often requiring them to complement each other to provide comprehensive protection.  

Collision Damage Waiver (CDW)

Insurance provided by overseas car rental companies typically covers vehicle collisions and damage but comes with a certain excess. In Japan, for example, most rental companies stipulate an excess of approximately JPY 50,000 to 100,000 for vehicle damage under basic insurance, depending on the car type, and offer CDW as an add-on to reduce this fee. In South Korea, rental car insurance similarly imposes an excess ranging from hundreds of thousands of KRW for vehicle damage, and drivers can purchase Super CDW or Zero Deductible plans from the rental company to further lower the excess.

In Hong Kong, the rental car excess coverage in self-drive travel insurance is specifically designed to compensate for such amounts, with typical coverage ranging from HKD 5,000 to 20,000. If the excess stipulated in your rental contract exceeds the coverage limit of your self-drive travel insurance, you will still be responsible for the excess amount beyond the limit.

Rental Car Excess Coverage

Rental car excess coverage is one of the most significant advantages of self-drive travel insurance compared to rental company insurance. Rental company insurance generally only starts compensating after the excess is paid, whereas the "rental car excess coverage" in self-drive travel insurance can directly cover this excess, reducing your unexpected expenses. However, note that many plans cover only the excess itself, and whether they also include the "Non-Operation Charge (NOC)" levied by rental companies varies by insurer—some include it, while others do not cover it at all. You must carefully read the terms before purchasing.

Personal Medical

Most insurance provided by rental companies focuses primarily on vehicle damage and third-party liability, with generally limited medical coverage for drivers and passengers, or it may even be excluded. In contrast, since self-drive travel insurance is tied to travel insurance, which typically offers higher overseas medical coverage, it includes expenses for emergency medical evacuation, hospitalisation, and surgeries.

Third-Party Liability

The situation with third-party liability insurance is also worth noting. For instance, basic insurance from Japanese rental companies covers unlimited compensation for third-party personal injury and property damage, while rental car insurance in South Korea and Taiwan typically includes mandatory third-party liability coverage.

However, self-drive travel insurance in Hong Kong generally does not cover injuries or property damage to third parties caused by your driving. This means that if you cause damage to another vehicle or property due to negligence while driving overseas, self-drive travel insurance will not compensate for the third party’s loss—you must rely on the rental company’s insurance. Therefore, it is crucial to confirm that the rental company’s basic insurance includes sufficient third-party liability coverage.  

Other Travel Risks

Another major advantage of self-drive travel insurance is that it is tied to traditional travel insurance, covering basic protections such as loss of luggage, flight delays, trip cancellations, and loss of personal belongings. These risks are unrelated to the vehicle but are equally likely to occur during travel. If you rely solely on the rental company’s insurance and neglect travel insurance, these common travel risks will remain completely unprotected.  

Further Reading:
【Travel Insurance】Comparison of Trip Delay Coverage in 10 Products – Up to HKD 3,600 Compensation for Flight Delays?    
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Important Notes on Self-Drive Insurance for Mainland China (Hong Kong Vehicles Travelling North)

If you plan to drive your Hong Kong-registered vehicle to Mainland China (under the "Hong Kong Vehicles Travelling North" scheme), the insurance requirements are entirely different from those for renting a car. According to the Road Traffic Safety Law of China, all vehicles travelling on mainland roads—including Hong Kong vehicles—must be covered by "Compulsory Motor Vehicle Liability Insurance" (commonly known as "Compulsory Insurance").

Under the "Equivalence Recognition" policy, Hong Kong vehicle owners are not required to purchase a new policy from a mainland insurance company. Instead, within the validity period of their existing Hong Kong motor insurance policy, they can purchase additional "Equivalence Recognition" coverage from the same Hong Kong insurance provider, which is equivalent to the mainland’s "Compulsory Insurance". This simplifies the process, allowing Hong Kong vehicle owners to avoid purchasing a separate policy from a mainland insurer.  

As the "Hong Kong Vehicles Travelling North" scheme involves regulations across both Hong Kong and Mainland China, some Hong Kong travel insurance providers have started offering specific "Hong Kong Vehicles Travelling North" protection plans. These plans cover benefits such as compensation for severe injuries or fatalities resulting from traffic accidents, as well as protection for high-speed rail delays. If you frequently travel to the Greater Bay Area for self-driving trips, it is worth evaluating these targeted insurance options.  

Further Reading: What Should You Pay Attention to When Self-Driving in Mainland China? Renting a Car in Mainland China vs. Hong Kong Vehicles Travelling North—Which is Better?

Important Notes on Self-Drive Insurance for Japan

Japanese law mandates that all vehicles on the road must be covered by "Compulsory Automobile Liability Insurance", which primarily compensates for personal injuries or fatalities to third parties in traffic accidents. On top of this, car rental companies typically purchase additional commercial insurance covering third-party liability, vehicle damage, and passenger accidental injuries, which is usually included in the rental fee or basic insurance plan.

Generally, rental companies’ coverage for third-party property damage and damage to the rented vehicle each comes with a deductible of approximately JPY 50,000, totalling up to around JPY 100,000. However, for certain vehicle types or companies, the deductible for vehicle damage may be increased to JPY 100,000 or more, and the exact amount should be confirmed based on individual terms and conditions.

If you opt for "Collision Damage Waiver (CDW)" insurance, the rental company usually covers the aforementioned deductibles for property and vehicle damage on your behalf, effectively waiving most or all related deductibles. However, CDW does not cover all costs; for instance, compensation for loss of business (Non-Operation Charge, NOC), traffic violation fines, or certain uninsured components may still need to be paid by the renter.

Self-drive travel insurance often includes "Rental Car Deductible Protection", which reimburses the deductible you are required to pay in the event of a rental car accident. Coverage typically ranges from a few thousand to around HKD 10,000. If the coverage amount is sufficient to cover the deductible specified in the Japanese rental car policy, there may be some overlap with CDW. Therefore, before purchasing CDW, it is advisable to review whether your travel insurance policy already includes such protection and whether there are any exclusions.  

Additionally, a common charge in Japan for rental cars is the "Non-Operation Charge (NOC)", which refers to the loss of business incurred by the rental company when a vehicle cannot be rented out due to repairs following an accident. The amount is typically around JPY 20,000 if the vehicle can still be driven back to the rental station, or around JPY 50,000 if it cannot be driven back and requires towing. The exact figure depends on the rental company. Most Hong Kong self-drive travel insurance policies with rental car deductible protection do not cover NOC, with only a few products offering compensation for this. As such, travellers usually need to bear this cost themselves or consider purchasing additional coverage from the rental company that includes NOC protection.

Further Reading: [Japan Self-Drive Guide 2026] 12 Key Points for Hong Kong Residents Self-Driving in Japan

Important Notes on Self-Drive Insurance for South Korea

In South Korea, all vehicles on the road are required to have compulsory automobile liability insurance, which primarily compensates for personal injuries, fatalities, and property damage to third parties in traffic accidents. Rental companies generally include this mandatory insurance in the basic rental fee, so renters do not need to purchase this statutory coverage separately. However, even with basic insurance, a "deductible/excess" often applies to vehicle damage, meaning drivers are still responsible for a certain amount in the event of body damage. As a result, many rental companies offer "Collision Damage Waiver (CDW)" or enhanced zero-deductible plans to reduce or even waive the deductible for vehicle damage. However, whether this constitutes a "full waiver" and whether it also includes NOC (Non-Operation Charge) depends on the specific terms of the company’s plan.

Important Notes on Self-Drive Insurance for Taiwan

Taiwanese law requires all vehicles on the road to have compulsory automobile liability insurance. Rental companies generally include this mandatory insurance in the rental fee, so renters do not need to purchase this coverage separately. The deductible for vehicle damage coverage with most rental companies ranges from approximately NTD 5,000 to 10,000, depending on the vehicle model and rental company. Generally, the amount drivers are required to pay out of pocket is relatively manageable. On top of the compulsory insurance, Taiwanese rental companies typically provide additional coverage such as vehicle damage insurance, theft insurance, driver and passenger accident insurance, and third-party liability insurance. However, the specific coverage details, limits, and whether they are automatically included vary depending on the company and plan.  

In the unfortunate event of a traffic accident or vehicle damage during a self-drive trip, you should immediately report the incident to the police and obtain a police report or accident record from the local authorities. At the same time, remember to keep the car rental receipt, repair invoices, medical reports, and relevant expense receipts for future insurance claims.

Most insurance companies require claims to be submitted within 21 to 30 days after the incident, so it is advisable to handle the process as soon as possible to avoid missing the deadline. If the insurance company offers online claims or electronic document upload services, this can save time and expedite the approval process. In case of uncertainty, you may first contact the insurance company’s claims hotline for assistance to ensure the application is completed smoothly.

Can I Claim from Both Car Rental Company Insurance and Travel Insurance Simultaneously?

The core purpose of insurance is to "compensate for loss," not to allow the policyholder to profit from a loss. Therefore, individuals renting a car cannot claim for the same loss from two insurance companies. In the event of an accident, if the renter has already paid a "deductible" to the car rental company, they can submit proof of payment to their travel insurance for reimbursement of that expense. This serves as complementary coverage, not double compensation. Renters should retain their rental receipts, repair invoices, and incident report documents.

If I Have a Car Accident Overseas, Will the Car Rental Company Cover Medical Expenses?

Insurance provided by car rental companies typically only covers vehicle damage. Medical expenses, hospitalisation, and emergency transportation costs are generally not included. Therefore, it is advisable to purchase travel insurance with medical coverage before departure.

Under What Circumstances Will an Insurance Company Refuse to Pay a Claim?

Common reasons for claim rejection include: driving under the influence of alcohol or drugs, dangerous driving, breaching the terms of the rental agreement, or engaging in illegal activities. In such cases, even if insurance has been purchased, the insurance company has the right to refuse compensation.

This article was last updated on: 6th February 2026

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.