CDW – what it is ?


CDW stands for ‘Collision Damage Waiver’ and is a form of insurance or sometimes ‘top-up’ insurance covering some aspects of car hire.

When renting a vehicle, the basic ‘included in the price’ insurance is often limited. It may or may not include third party, fire and theft cover and in some cases offer only a restricted form of cover for the hired vehicle itself.

The insurance that covers the hired vehicle is called CDW (Collision Damage Waiver).  If CDW is not included in the initial hire cost, and the renter does not pay for it as an additional option, then any damage to the hired vehicle itself will be payable by the renter.

Even though many car rental companies include a limited form of CDW in their hire price (others will offer it as a chargeable extra) this does not mean that the hired vehicle is totally covered by insurance.

Having the basic form of CDW in place means that some categories of damage to the hired vehicle will be ‘covered’ in the event of an accident. However, most basic ‘included the price’ CDW provided by the car hire companies will typically exclude certain types of damage from their cover. These exclusions usually cover the tyres, roof, wheels, lights and windows – all areas easily damaged in even minor accidents

In the case of damage to these areas of the hired vehicle, the costs would need to be paid by the hirer.  It is worth remembering that in these circumstances the hirer may have little say in who assesses or repairs the damage and therefore only limited if any control over the costs involved.

Basic CDW can also have another drawback – it will almost certainly be subject to hefty excess. The CDW excess is that proportion of any damage, claims or repair costs that the insurance company/policy will expect the hirer to pay following an accident. In other words if damage to the vehicle totalled 1500 and there was a 500 excess, then the hirer would have to pay the first 500 themselves and the CDW would cover the remainder.

The joint exposures of the excess and exclusions can cause some people sleepless nights when renting a car but there are ways to protect against these risks.

It some cases, by paying the car hire company a larger amount at the time of rental (sometimes called ‘top-up’ insurance) it may be possible to reduce the CDW excess and increase the damage types covered.

An alternative to CDW taken out through the car hire company is CDW or CDW insurance taken out directly through a specialist insurance company. This can be taken out for a period of months or on an annual basis.
 
 

This type of CDW may offer two significant advantages. Firstly as it is sold to an individual it relates to all the vehicles hired by the policyholder within the period of the policy and not just a single vehicle or a single hiring/hire company. This may offer significant cost savings over CDW or top-up CDW purchased on a hire-by-hire basis through a car hire company.  The second advantage is that many such policies offer a much broader cover and include things such as the wheels and tyres that may be excluded by the typical CDW of the car hire companies.
   
CDW policies purchased directly from an insurance company usually operate on the basis that if an accident arises then the hirer may still have to pay the excess to the car hire company, but this can then be claimed back through their CDW insurance company.

Whether purchased from the car hire company or a specialist insurance company, the CDW cover, costs, conditions and exclusions should always be examined carefully prior to purchase to ensure that they meet the hirer’s needs.

   

Dr S. Jacob said:

I took car insurance from you recently for a trip to Italy and although I did not make a claim, your support and communication were reassuring