Collision Damage Waiver (CDW): Definition
What is Collision Damage Waiver? A collision damage waiver (CDW) is a particular type of insurance which is often offered when you are renting a vehicle and is sold by a rental car company. It typically covers a damage/loss should an accident occur. Typically, an auto rental company charges you about $20 per day for this insurance (which is not really cheap), and there are a couple things that you will want to understand when getting this insurance:
- What’s covered? Are only damages to a vehicle covered, or is 3rd party liability covered as well?
- What are the coverage limits? Often these limits can be low (e.g. minimal limit required by law) whereas accidents with bodily injuries can add up to huge amounts.
- What are the exclusions? Some CDWs may not cover driving on unpaved roads and other such things.
Credit Cards and Collision Damage Waiver
Often credit cards have a feature called “rental car insurance”. In fact, it is a collision damage waiver for rental cars. An important thing to know about this feature is that it does not cover 3rd party liability and your personal injuries. Also, in order to use it you need to pay for your rental car with this credit card and decline the collision damage waiver offered by the auto rental company. This insurance is typically limited in time (e.g. no longer than 48 consecutive days), and if you have a non-standard car (e.g. very expensive rental, cargo van or pick up car etc., it might be not covered) you need to check if your card’s insurance covers it.
Your Auto Insurance and Collision Damage Waiver
If you feel that you need more protection than your credit card offers, or you do not want to spend $15-20 per day for a collision damage waiver offered by a rental agency, there is a better alternative: Your own auto insurance. Many providers offer additional pieces of protection (also called riders) which will protect your rental car. This may only cost you an additional $30 per year on top of your usual premiums.
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