All rental cars come fully insured, however the hirer is liable for an initial amount in the event of an accident or damage. This excess amount varies between suppliers but can be upwards of $4000. You can reduce your liability to a few hundred dollars or less by paying the rental company a daily fee, which generally adds around $30 per day to your rental costs.
Many travel insurance policies will include car excess reduction options, alternatively there are specific insurance policies written to cover car rental. Learn more about Australian car rental insurance options. Whichever option you elect to take remember that in the event of an accident secure copies of all documentation, police reports and if possible take photos.