Most of the car rental companies sold off their stock during the early stages of COVID-19 to save costs…not having to pay ongoing costs for a non-income generating assets. In many areas the fleets were halved by these companies to try and survive the travel freeze caused by government Covid-19 controls.
Now that domestic travel is possible, these companies have been trying to replace the fleet sold off about 12 months ago. If you are trying to buy a new car with a specific specification, you would know that there is many months wait for new vehicles. This has created a significant shortfall between available vehicles and demand.
As rental companies are back in full swing, there fixed costs are the same as pre-Covid but spread over smaller number of vehicles. With demand pushing up prices, the spread of fixed costs over a smaller base has exacerbated the price problem.
This would have been outlined in the PDS when taking out cover.
Some insurers offer $40/day allowance, some offer $100/day or more. It is likely the $40 is offered by budget type insurances to save the cost of the premiums. Unfortunately cheaper or restricted insurance cover to save money may come unstuck when a claim is needed against the insurance.