A collision damage waiver (CDW) is a different type of insurance that is often given when we are taking the vehicle on rent and is sold by a rental car company. This covers damage/loss should an accident occur. Typically, a vehicle rental company charges you about $20 per day for this insurance, and there are some considerations and points that you will want to understand when getting this insurance
Covering under Collision Damage Waiver:
The car’s bodywork.
It does NOT cover, following:
windows and mirrors
Wheels and radial covers
Interior of vehicle
personal belongings of renter
GPS, child seats, etc
Charges for towing
Is Collision Damage Waiver the same as insurance?
No, Collision Damage Waiver is not the same as insurance. As the car hire companies are liable for any damage to their cars, as they hold the insurance. So the car hire companies have the full right to pass on this damage liability to the renter or someone who rents their cars, but they ‘waive’ this right of damage, although the renter is still responsible for some of the costs.
As per the renter’s viewpoint, it doesn’t really matter whether it is called insurance or a waiver. Whatever it’s named, it’s a policy that protects the renter from unexpected bills.
What is covered if the renter/driver damages someone else’s property?
Collision Damage Waiver is not the only cover to hire cars. Mostly it comes with Theft Protection, which covers theft of the vehicle, and Third-Party Liability cover, which covers damage to other people’s property
However, the cover that comes with a car also depends on the location where you live and where you’re renting. The insurance cover clauses will explain more in detail what is included.
Loss Damage Waiver (LDW)
Loss Damage Waiver (LDW) – It is an agreement with an auto rental company in which the person who takes the vehicle is exempt from liability for physical damage to the vehicle as well as theft of the vehicle in exchange for a fee, subject to the terms and conditions of the rental agreement which is signed or that one exists. It is not a type of insurance but a contractual obligation subject to many restrictions in case of accident and damage to the vehicle. In an agreement, the renter can choose either a full damage waiver or for partial damage responsibility cover or only over a certain specified amount, which is considered as an inverse deductible. The rental agreement typically states, that purchasing the damage waiver is not mandatory for the renter.
How Do CDW and LDW Waivers Work?
If a renter buys this waiver, renters will not be held responsible or have limited liability for any loss or damage caused to a rental car. That can be very helpful if a vehicle got into an accident while driving it, regardless of who is at fault.
The proper scope of coverage, as well as any exclusions or waivers, can vary by company, and can also be modified as per your requirements as a renter. It’s important to know the clauses and rules of your car rental agreement. Renter should follow them precisely, especially if an additional fee is paid for a damage waiver.
You can be liable for a very high deductible when you rent a car, sometimes equal to the value of the car. So, there are usually more options to limit your risk for financial loss in case of an accident.
Coverage Limited to Rental Vehicle
It’s very important to know that a CDW typically covers all damage to the rental vehicle. Moreover, it’s without charging from the deductible, it is limited to only that vehicle. The CDW will not be relevant enough if in an accident you cause damage to property, including any other vehicles, So this damage will need to be covered either from your personal insurance policy or by any other additional or supplementary cover of insurance you purchased.
There are certain other limits to the coverage also which are imposed by the states in which the vehicle is rented. For example, according to one Rental company, as per rental requirements with LDWs, the damages will not exceed $500.00 in California and $2,500.00 in Nevada. Suppose if the loss or damage to the car because of vandalism and its unrelated to theft is done. The renter is not responsible for theft regardless of purchasing the LDW unless the theft is not because of the renter’s negligence.
How much do CDW and LDW cost?
The price for a CDW or an LDW varies on the basis of location, rental company, and the type of car you are renting for where you are taking. For example, for one city it can be as low as $9 per day as compared to other cities depending on clauses of waiver, place of rent, place of living. In other cities, it could go up to $500 for some companies for high-end cars depending upon the number of factors that are considered.
Need of buying LDW
CDW or LDW can be valuable, as compared to any other coverage available to cover the physical damage. If your personal insurance policy is having a high deductible, then coverage from any other source will hold you responsible for rent during the days the rental car is down and undergoing repairs. so these costs can add up very quickly. So you’re paying money to fix a vehicle you’ll not get benefit from driving. If you have the waiver, then you’re covered.
No doubt an accident can affect the insurance rates of your personal auto insurance, However if a waiver is taken it means the rental company would take care of all formalities and related issues. Hence your premiums may not go up.
Suppose, a driver/renter met with an accident and as a result a large dent in the passenger side door of his rental vehicle. If he has purchased a collision damage waiver then the driver would not have to worry about a deductible or paying for repairs Without a CDW, his personal policy may still provide coverage, minus whatever the deductible is applicable will be imposed. Moreover, the rental company still can charge rent during the time the vehicle is down and it’s being repaired.
When making your decision, compare all these factors. If you are carrying good insurance and have a low deductible, it’s not advisable to pay for a CDW, especially when you use a rental car most of the time. For example, if you’re paying on average $10 per day for a CDW package and your personal policy has a deductible of $125. This way it takes only about two weeks of driving a rental to cover the spending on a CDW as your deductible would cost.