Loss Damage Waiver (LDW): Definition
A Loss Damage Waiver (LDW) is a particular type of insurance which is often offered when you are renting a vehicle and it is sold by a rental car company. It is also called a collision damage waiver (CDW), and it typically covers a damage/loss should an accident occur. Usually a car rental company would charge you about $20 per day for this type of protection, but there are several aspects of this insurance that you want to understand:
- What’s covered? Is that only damages to a car, or is 3rd party liability covered as well?
- What are the coverage limits? Often these limits can be insufficient (e.g. minimal limit required by law) whereas accidents with bodily injuries can add up to huge amounts.
- What are the exclusions? For example, some LDWs may not cover you while you are driving on unpaved roads.
Credit Cards and Loss Damage Waiver
Often credit cards a have a feature called “rental car insurance” and it is, in fact, a loss damage waiver for rental vehicles. An important thing to know about it is that it does not cover 3rd party liability and your personal bodily 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 (CDW) offered by the car rental company. This protection often has a time limitation (e.g. car rental period should not be longer than 48 consecutive days). If you have a vehicle that would not be considered a usual vehicle, e.g. very expensive rental, cargo vans, pick up cars, etc., it might be not covered. You need to check in advance with your bank to see if your card’s insurance covers it.
Your Auto Insurance and Loss 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 the collision damage waiver (CDW) offered by a car rental company, you should look at your own car insurance. Many providers offer additional pieces of protection (also called riders) which are designed to protect your rental car and may only cost you an additional $30 per year on top of your usual premiums.
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