A collision damage waiver (CDW) – also known as a loss damage waiver (LDW) – is an insurance product that's usually offered by vehicle hire companies as an optional extra when a driver takes out a car rental contract.
This guide looks at everything you need to know about a CDW, and whether you should get one when you next rent a vehicle.
What is a collision damage waiver (CDW)?
A collision damage waiver (CDW) is offered to drivers taking out a car rental policy. It is an optional extra that may cover any potential costs associated with damage to the hire vehicle.
This can mean that some or all of the costs to repair the car after an accident will be covered by the CDW.
If you do not have this agreement in place, you may be to liable for significant costs in the event of theft or damage to the hire car.
Why might you need a collision damage waiver (CDW)?
When you hire a car, the insurance that is included can be quite basic. As a result, you might not be covered for any damage caused to the vehicle in the event of an accident.
The excess level on car hire insurance can be high, which means you may also have to pay a lot of money if the car is damaged or stolen.
A collision damage waiver (CDW) can protect you from having to pay for repairs or excess fees. However, as with any insurance product, ensure you check the terms and conditions of the CDW - as the level of cover can vary from product to product.
How does a collision damage waiver work (CDW)?
A collision damage waiver provides drivers peace of mind by reducing the financial risk of renting a vehicle.
Should the vehicle be involved in a collision, the insurer of the policy will cover some or all of the costs related to the physical damage of the vehicle involved in a crash.
When a driver opts to have a CDW, they pay an additional fee on top of the rental costs to cover the purchase of the insurance product.
Drivers will sign an agreement, which will add either a daily or total added charge to the agreement to have a CDW. Should they need to claim, they will need to speak with the insurance company and provide evidence.
If the rental car is damaged in an accident, the CDW may covers the cost of the repairs which can include vandalism, and sometimes weather-related events.
Also, if the rental car is stolen, a collision damage waiver can potentially cover the cost of replacing the vehicle.
If you are looking at renting a car abroad, there may be different rules associated with a collision damage waiver agreement.
What does a collision damage waiver (CDW) cover?
If a driver is looking to take out a collision damage waiver agreement, it is likely to include the following:
- Repairing the damage from a collision
- Theft of vehicle or parts of it
- Potential loss of income due to car needing to be repaired
What will a collision damage waiver (CDW) not cover?
A collision damage waiver (CDW) has some limitations, which will be outlined in any agreement signed by the driver.
Here are some things that are not included in a CDW agreement:
- Liability: A CDW does not cover damages to other vehicles, property, or injuries to other people involved in a collision.
- Personal items: Does not cover personal belongings stolen from the car.
- Negligence: Often excludes coverage if damage occurs due to reckless driving, illegal activity, or violation of rental agreement terms.
It is also important to note that there may be some additional fees that will need to be covered by the driver, such as towing the vehicle, and the administrative fees that are linked to repairing the vehicle.
No matter what is in the agreement, it is important to read and understand every part of the waiver before signing it.
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