Collision Damage Waiver (CDW): Definition and Coverage

Collision Damage Waiver

A collision damage waiver (CDW), also known as a Loss Damage Waiver (LDW) or Physical Damage Waiver, is an optional coverage offered by car rental agencies. It helps pay for damage to the rented car, including theft in some cases. The cost of the waiver depends on factors such as the type of rental car and location.

Learn more about what a CDW covers, how it interacts with your insurance or credit cards, and whether it’s worth getting.

• Car rental companies offer the collision damage waiver as additional coverage.
• To get a CDW, you’ll pay a daily fee for the duration of your rental.
• A CDW covers auto damage during the rental period, including theft in some cases.
• You can decline CDW if you have personal auto insurance with collision and comprehensive coverage or a credit card with primary rental car insurance coverage.

How a Collision Damage Waiver Works

A car rental company typically offers a collision damage waiver when you reserve the automobile or pick up the rental car. If you choose not to get CDW, you must explicitly decline the optional coverage.

To purchase a collision damage waiver, you’ll pay an additional daily fee on top of the rental car fee. The fee amount can depend on the car’s cost, with more expensive vehicles having higher fees.

If the car is damaged, the agency waives its fees for repairing the car and any loss of use charges while the rental vehicle is being repaired.

Some agencies offer partial damage waivers or waivers with deductibles, which cover only a portion of the damages and cost less.

In the event of an accident, report the incident to the agency and, if necessary, to law enforcement. The rental agency covers qualifying repair costs, and the incident isn’t reported to your insurance company unless you were at fault or the damage or cause is excluded.

What a Collision Damage Waiver Covers

A collision damage waiver typically covers damage to the rental car while in your possession. This includes accidents, vandalism, theft, fire, and weather-related damage.

The coverage may also include damage while the car is parked and accident-related towing. Rental agency coverage usually covers administrative fees and any lost revenue due to the vehicle being out of rotation (loss of use).

However, specific coverage and exceptions vary, and it’s important to read the details of a CDW offer and ask questions. Some may require a separate theft protection plan, while others may have exclusions for certain types of damage. The details will be listed in your contract.

What a Collision Damage Waiver Does Not Cover

A collision damage waiver does not cover damage to other cars, bodily injury to others, injuries to you or your passengers, or theft or damage of personal items in the vehicle.

Liability coverage for damage to other people or their vehicles may be included in your rental rate or it may only kick in after the liability coverage through your personal insurance is exhausted. Your personal auto policy or health insurance may also provide coverage for injuries, while your homeowners policy may cover theft.

Additional exclusions may apply, such as interior damage, lost or stolen keys or devices, damage to the windshield, tires, or mirrors, and specific activities that could be considered criminal. These exclusions will be listed in your contract.

Cost of a Collision Damage Waiver

Collision damage waivers are not expensive, but they can increase the total cost of your rental by $100 or more for a few days.

Pricing varies depending on the rental company, location, vehicle type, and other factors. On average, the cost ranges between $25 and $35 per day for an economy car, with higher costs for more expensive vehicles.

Should You Get a Collision Damage Waiver?

Deciding whether to get a collision damage waiver depends on your coverage needs and risk tolerance. If you have personal auto insurance or a credit card with rental car coverage, you may not need CDW. However, it can provide additional peace of mind and protect against certain costs that may not be covered by other insurance.

Your Personal Car Insurance

If you have collision auto insurance on your personal vehicle, you likely have similar coverage when renting a car. However, your personal insurance may not cover loss of use, towing fees, or the rental company’s administrative expenses. It’s important to call your insurance representative to understand your coverage when renting a car.

A CDW can reduce the risk of an incident being reported to your insurance and help you avoid paying your insurance’s deductible if you damage the rental car.

Your Credit Card

Some credit card companies offer rental car coverage for cardholders who pay for the rental with their credit card. Secondary rental car coverage picks up costs beyond what your auto policy covers, while primary rental car coverage covers costs up to the car’s value or a high limit.

Credit card rental car insurance may have limitations, exclusions, and specific requirements. Luxury vehicles may not be covered, and coverage may be limited in certain countries.

Is a Collision Damage Waiver Worth It?

If you don’t have coverage through personal auto insurance or a credit card, a collision damage waiver can provide valuable protection. It can save you from paying your insurance deductible and ensure that you have coverage for damages. However, if you have appropriate coverage through other sources, CDW may not be necessary.

Difference Between CDW and LDW

CDW stands for Collision Damage Waiver, while LDW stands for Loss Damage Waiver. LDW may include theft and accident coverage, and some companies that refer to their offer as CDW may also include theft. Verify the terms of your rental.

Does CDW Cover Flat Tires?

A collision damage waiver covers costs related to accidents, so tire repair is covered if the tire is damaged in a crash. However, tire damage from other causes may not be covered. Some rental companies offer separate coverage for glass and tire damage.

Conclusion

Deciding if a collision damage waiver is worth it depends on your coverage needs and preferences. It’s important to understand your existing coverage and the limitations of CDW to make an informed decision. CDW can provide additional protection, but it may not be necessary if you have suitable coverage through personal insurance or a credit card.