Collision Damage Waiver (CDW)

What Is a Collision Damage Waiver?

A collision damage waiver (CDW) is additional insurance coverage offered to an individual renting an automobile. A collision damage waiver is optional, with the cost of the waiver dependent on a variety of factors, including the type of rental car and where the car is being driven. The waiver typically covers losses from the theft of or damage to a rental car but is unlikely to cover bodily injury caused by an accident.

Understanding Collision Damage Waivers

Car rental customers that purchase a collision damage waiver pay an additional daily fee on top of the rental car fee. The CDW provides a level of protection for the renter that covers damage to the rental car. If the car is damaged then the renter is not responsible for some or all repairs, as well as for any loss of use fees that may accrue while the rental car is being repaired.

Collision damage waivers are often offered by car rental companies on multiple occasions during the rental process. Renters are typically offered a CDW when they reserve the automobile, as well as during the process of picking up the rental car at the rental counter at the airport through a sales process. In many cases, the renter has to explicitly decline the optional coverage.

Credit card companies may offer CDW for cardholders that use their credit card for the full rental cost of the vehicle. Depending on the terms and conditions of the credit card policy, CDW offered by the company may be considered in addition to or supplemental to any other insurance that the renter may have, such as a regular automobile insurance policy. Some premium credit cards offer primary CDW coverage, avoiding the requirement for the renter to file a claim against their personal policy in case of an accident.

Insurance requirements that have to be met by car renters vary by state and by country. In some cases, the renter can decline CDW coverage while not being required to provide proof of other insurance, such as from a credit card or with an automobile insurance policy. In other cases, the renter may be required to purchase the collision damage waiver if they cannot provide an alternative form of insurance coverage.

What a Collision Damage Waiver Covers

A collision damage waiver only covers rental car damage. It does not cover any liability-related expenses, such as if someone causes an accident that damages other vehicles or results in injuries. In addition, a waiver won’t cover risky behaviors that result in damage, such as taking a rental car off-road, speeding, or driving drunk. Similarly, loss or theft of the vehicle is not covered if, for example, someone leaves it running outside the hotel. Though not as common, be careful of less obvious exclusions to a CDW, such as damage to the windshield, tires, and mirrors; though not as serious, this kind of damage is more common and can add up quickly.