The importance of CDW excess insurance

Collision damage waiver excess insurance (CDW Excess Insurance) describes a form of insurance policy that protects the hirer from having to pay for damage to the vehicle that is either excluded from the CDW policy or is included but the insurance payouts will not cover 100% of the claim.

In the UK and most other countries apart from the USA car rental companies will include CDW, Theft and Third Party insurance cover in their rental price. CDW insurance covers damage, theft covers theft of the vehicle but not its contents and the third party covers damage to some else's car.

There will very likely be an excess on these forms of insurance. This excess means that in the event of a claim the hirer would be liable to pay the excess amount before any contribution was made by the insurance company. Excess can also be referred to as Deductible or Non-Waiver.

For example an excess of 500 pounds on a policy for a car with 400 pounds worth of damage would mean that the hirer would have to pay all of the 400 pounds. With damage valued at 600 pounds the hirer would pay 500 (i.e. all of the excess) and the insurance company would pay the remaining 100pounds. Insurance policies from different companies carry different levels of excess which typically range from 500 pounds to as much as 1500 pounds.

The good news is that some insurers offer CDW excess insurance. Basically this is an insurance policy which will reimburse the hirer for any excess paid as a result of damage to the rental vehicle. The hirer normally would pay the car rental company or the excess would be automatically deducted from a credit card. The hirer would then claim this amount back from their insurance policy.

In the USA, CDW, theft and third party liability (also know as Supplemental Liability Insurance or SLI) are not normally included in the rental price if you book your car when you arrive and can be purchased separately although it does tend to be expensive. Cars can be rented without insurance but this would be risky and is not something to be undertaken lightly, particularly in the USA where court awards of damages can be staggeringly high. If you book in advance in the UK, CDW, theft and third party insurance can normally be included in your deal. Excess charging is not common in the USA and the hirer is normally responsible for damage to tyres, windscreen, undercarriage and roof of the car

You don't have to take out CDW excess insurance – it is completely voluntary but it may make good sense. You can buy it from the car rental company or you can purchase it in advance from an independent insurance company. If you know you are going to take out an excess insurance policy it might be worth comparing the offerings of the independent brokers and the car rental companies. There may be fairly significant price differences. As with all types of insurance, always read the policy details as the CDW excess insurance of some insurers may still exclude the most commonly damaged parts of the vehicle – windscreen, tyres, roof and undercarriage.