Collision Damage Waiver is a service provided by rental car agencies to protect you from financial losses in the event of an accident which may damage the car you have rented. Though not exactly an insurance, this service is commonly referred to as collision damage waiver insurance (CDW) or Loss Damage Waiver insurance (LDW). CDW covers some of the possible charges like ‘loss of use’ cost which is usually not covered by a personal auto insurance or a credit card insurance. Read more about credit card rental insurances at www.fool.com/credit-cards/2017/10/02/do-you-really-get-rental-car-insurance-through-you.aspx. CDW may also cover towing and administration charges.
CDW covers only the damages to the rental car and not the damage to any other vehicle or property in the case of an accident. Moreover, there are certain conditions which are excluded from the coverage. This includes off-road driving, driving under the influence of alcohol or drugs, over speed, etc. The waiver also does not cover the theft of the car or any damages which occur during an attempt of theft. Depending on the rental company, there may be other elements also which are excluded from CDW coverage.
Cost of Collision Damage Waiver
The cost of CDW varies from company to company. The usual cost for an economy car is about 25 to 40% of the basic rental cost of the vehicle. As different companies offer different prices, you have to go through the rental agreement carefully to know about the actual cost.
Alternative insurance options
Other than buying a Collision Damage Waiver, you have two other options to insure your rental car; they are your personal auto insurance and credit card insurance. Let us look at both the options in detail.
Personal auto insurance coverage – Personal auto insurance policies usually cover rental cars also, but not outside the U.S and Canada. Paying off the rental car damage related expenses using a personal policy may require you to pay increased premiums in future. Moreover, the excess which you have to pay may also be more due to uncovered costs. However, having both personal auto insurance and credit card insurance together may reduce your excess.
Credit card insurance coverage – Most of the credit card services offer some type of insurance coverage. The important point to note here is that your rental car will get an insurance coverage only when the whole payment including reservation charges using a credit card. Moreover, you must not be making use of any damage waiver provided by the company. Some credit card companies also have restrictions regarding the duration of the rental, the type of the vehicle, etc.
If your credit card insurance or personal auto insurance covers rental cars, then purchasing a Collision Damage Waiver is not compulsory. But the increased premiums and non-coverage of certain costs do not make them sufficiently reliable in all situations. Paying the small fees and buying a waiver is better compared to the headaches you have to go through in case something unfortunate happens. Whichever insurance option you choose, make sure that you click pictures of your rental car before taking it. This would serve as a proof for already existing damages!