What is collision damage waiver insurance?

Nobody likes thinking about car accidents, particularly when one is driving a hired car. Unfortunately though, accidents can happen at any time including when sitting behind the wheel of that rented vehicle. Unless you have taken out something called collision damage waiver (CDW) then having even a minor accident in a hired car could prove very expensive indeed.

Collision damage waiver, sometimes confusingly also called loss damage waiver (LDW), is essentially a form of insurance that may or may not come included in the rental price of a hired car. It exists to provide cover for damage that occurs to the rented vehicle itself.

That’s because in some countries and with some hire companies, the basic hire charge only includes a limited form of insurance called third party. This means that anyone else involved in an accident with your rented vehicle is covered, but the rented vehicle itself isn’t. If the car only has third party cover then any damage to it will need to be paid for by you the renter. Remember that even if the third party cover also includes theft risk for the rented vehicle, a large dent in the bodywork still won’t be covered and you’ll have to pay.

Collision damage waiver is the insurance that will provide cover for damage to the rented vehicle; it may be included in the hire price in some cases, or the car hire company may offer it to the renter as a chargeable extra. In either case, it would be prudent to check to ensure what it covers as some CDW policies can exclude damage to certain commonly damaged areas of a vehicle such as tyres, wheels and windows, - all these areas can be expensive to repair if damaged and it will be you the renter that has to pay.

It is also usually a good idea to be clear what excess the policy carries. Collision damage waiver policies sold through the car rental companies may have a hefty excess on them – that is the ‘first part’ of any claim amount that the renter will be expected to pay themselves. It’s not unusual to see this stated to be in the range 500-1500pounds sterling.

If you decide, for peace of mind and security, that you want the best CDW cover possible at the lowest price, then it can be purchased not only from car rental companies but also general insurance companies – often via the Internet.

The CDW policies sold by insurance companies cover a policyholder and not a rented car so they will cover all rented vehicles used by the policyholder within the life period of the policy. This means that the price is often very attractive when compared to similar offerings from the car rental companies and furthermore, they frequently will cover areas of vehicles typically excluded from cover by the rental company’s policy.

For collision damage waiver, as with all insurance, it is usually a good idea to shop around in advance to find the best deal possible. It’s worth doing some Internet searching and familiarising yourself with the offerings available – you could save some serious money!