The car rental company has their own insurance for the car. 

The rental vehicle excess is the portion of the car insurance cost that is the responsibility of the customer, the excess.  The excess may also be referred to as the Damage Liability Fee or Damage Recovery Fee.

For example, if the car rental company insures the hire car for $20,000, the rental vehicle excess component (capped amount) that the Customer is liable for if they damage the car, may be $4,000. 

This would mean that the Customer would be liable to pay for the first $4,000 of car damage and the car rental company would pay costs above the rental vehicle excess value.

In Australia, the rental vehicle excess value commonly ranges between $4,000 and $6,000 for standard car types and up to $8,000 for prestige, 4WDs, mini buses and motorhomes when renting a vehicle in Australia. For specialty cars, the excess may exceed $8,000.

The rental vehicle excess cost depends on the car rental company that you hire from, the car type and pick up location.

The "What is my financial liability when renting a hire car in Australia?" article provides further information about the rental vehicle excess.