What is Collision Damage Waiver Insurance?
Before you agree to purchase any kind of insurance, you need to be sure that you fully understand what you signing up to. Sometimes, a rental company will require you to purchase Collision Damage Waiver (or CDW) or Loss Damage Waiver (or LDW). So, what do these insurances actually cover, and what do you have to pay? The simple answer is that these coverages will ask for a specific amount to be paid each day you have the rental car in your possession and in return, you will receive a reduced deductible payment should the car be damaged or stolen. The long answer is that the amount this will cost you varies vastly.
The cost is usually dependant on the kind of car you are renting, and also your location. There are some countries, such as Ireland, that require your to purchase CDW insurance in order to rent a car at all. Or else, you may be asked to provide proof of equivalent or alternative coverage. Taking out CDW coverage can sometimes increase the overall cost of your car rental by 25 percent, or maybe even more.
What Does it Actually Cover?
This could vary from rental company to rental company, so always make sure you have read through and fully understand the policy you could be potentially purchasing. More often than not, a Collision Damage Waiver covers the car’s body and any harm it comes to. However, while it makes sure that if your car’s bodywork is damaged you won’t have to shell out excessive amounts of cash, there is normally quite of lot of parts and components it does not cover.
CDW coverage often excludes:
Windows and mirrors
- engine
- the car’s undercarriage
- the interior
- flat battery
- wheels and tyres
- personal belongings
- lost keys
- extras, such as child seats, racks or GPS
- any towing charges.
Some rental car hire companies can be quite sneaky with their CDW insurance – for example, they may cover the outer shell of the wing mirror (the part that is the same colour of the car’s bodywork) but refuse to cover the actual glass of the mirror or the mechanism that allows the user to adjust the position of the entire mirror. In addition to this, some insurances will cover the roof of the car, whilst others will not. Pretty stingy, right?!
Will Collision Damage Waiver Cover all Costs of Repair?
The short answer to this is no, generally, Collision Damage Waiver coverage does not cover all repair costs. Like the majority of all insurances for rental cars, CDW coverage often will include an excess, or deductible. This is the maximum amount that the person renting a car will have to pay towards any bodywork repairs. Often, this is between $600 (or £500) and $3,500 (or £3,500). If any other part of the car is damaged, the renter will usually be required to pay the entire cost of repairs.
Is it Worth It?
It is difficult to come to a conclusion on this that appeals to everyone in every situation – you will need to weigh up the pros and cons. On one hand, investing in CDW insurance will definitely save you money in the long run if the rental car comes to harm. If the rental car becomes damaged and you have not taken out CDW, you will likely owe the rental service a large amount of money. The deductible cost on the rental car could be thousands of dollars, and you might also be asked to cough up for loss of earnings whilst the car is undergoing repairs. Ouch!
It does seem as though taking out Collision Damage Waiver coverage might be worthwhile for a long distance journey, however, it can be incredibly expensive. In fact, it could double the total cost of the rental. If you are an experienced driver and are only going to be travelling a short distance, you may be okay to not invest in CDW. However, you must make your own judgment call. You may save money in the short term, but if you get into an accident, you might end up spending even more. It’s a good idea to ensure that you have read the agreement from the rental car company from front to back to come to an informed decision as to whether you should purchase Collision Damage Waiver coverage.
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How to Save Money on Insurance for Your Rental Car
You may have decided you do not want to pay the premium price of Collision Damage Waiver insurance, however, when renting a car, tricky salespeople can all to often pile the pressure on and make you feel forced to invest in add-ons that you don’t really want to. However, there are alternatives to purchasing CDW coverage, which we’ve established, can be extremely expensive.
Some other kinds of covers come with Theft Protection, which covers the car if it is stolen or damaged when someone attempts to steal it, and Third-Party Liability cover, which cover damage done to other people’s property or belongings. Check out some of the alternatives to CDW covers you can purchase.
Automobile Insurance
It is possible that your car insurance policy might include cover for damage done to any rental car you hire. In fact, there are some states in America, like Maryland, that require car insurances to provide this kind of coverage. Read your policy through thoroughly to look for any clauses to this effect, go online or phone them up to discover what coverage you have. Be vigilant of excluded areas such as Ireland and other areas outside of the United States – you don’t want to get caught out and end up splashing out even more cash!
If you find out that your automobile insurance does indeed cover damage to rental cars, don’t let yourself be pressured into purchasing Collision Damage Waiver coverage, as you don’t need it.
Credit Card
This might come as a surprise to some, but your credit card might actually be able to help you with your rental car insurance! This is because some credit card companies might be able to offer you CDW insurance. However, do be aware of your area’s individual exclusions, and where you are travelling to. For example, some companies will only cover areas in the United States and exclude certain countries. Furthermore, most credit card companies in Ireland will not cover car, however, American Express recently in July 2017 included Ireland in its list of countries that are covered. If you do opt for this, ensure that you have fully read the terms and conditions before renting the car, you do not want to miss some vital information.
Travel Insurance Providers
Travel insurance is a must for anyone travelling on a long distance journey, but did you know that you might be able to purchase an alternative version of CDW insurances at the same time as ensuring your trip? Many travel insurances companies will offer users the option to purchase Rental Vehicle Damage coverage as an alternative to Collision Damage Waiver coverage that your rental car company is likely to try to sell you. RVD coverage is very similar to CDW, however, it usually will only be applicable in certain situations, such as natural disasters, theft, collision, and riots. Other instances, such as the driver is over the legal limit of alcohol and damage the car, will not be covered by Rental Vehicle coverage. In addition, some rental vehicles will likely be excluded, such as motorcycles, camper vans, and vans. This is because these kinds of automobiles carry a higher level of risk than a regular car.
Rental Vehicle Damage insurance cannot usually be purchased by itself and is often included in a bundle of travel insurances. This can sometimes be better value for money, but always do be sure to weigh up the options. There are many different companies you can receive a quote for travel insurances direct from an underwriter like Travelex, HTH Worldwide, Travel Guard and MH Ross. Or, take a look at an online insurance aggregator to make life easier for yourself, Insure My Trip, Square Mouth and Travel Insurance are all great websites to check out. As always, do make sure that you read through the travel insurance policy carefully, checking for any exclusions before you purchase it.
Shop Around for Special Offers
Car hire companies make a lot of their profits by selling add-ons to your rental package, which can become ridiculously expensive, meaning you end up paying a whole lot more than you expected to. However, with a little bit of research, you can find some great offers and save plenty of money, so it can be better spent on your trip! Check out reputable online agents such as which can end up saving you just as much as going direct.
Do take a look at some of the larger car hire companies too, such as Hertz, Sixt, Budget, and Avis. These often give users special discounts and deals on different coverage packages, so while it might take some time to find the best price, it is definitely worth shopping around and seeking out the best deals.
Pros and Cons of Collision Damage Waiver Coverage
Every personal situation is different and you need to come to a decision that makes you feel safe and comfortable. If you are driving a short distance and don’t feel as though you require CDW insurance, do not allow a salesperson to put you in a high-pressure state where you are forced to purchase something you don’t need. On the other hand, sometimes the Collision Damage Waiver may be completely necessary.
Pros
- Peace of mind
When you purchase CDW coverage, you are protected from most occurrences and accidents, and this means that you will not have to pay such a large amount should the rental come to harm whilst on your journey. You can travel relatively worry-free, safe in the knowledge that if anything was to happen to your rental car, the huge payout will not be entirely on your shoulders.
- Protected from other drivers
As long as you have not voided the agreement by drinking past the limit whilst driving your rental car, for most Collision Damage Waiver insurances, you are covered for pretty much anything that might happen to your car’s bodywork, including bad drivers. Unfortunately, inconsiderate and dangerous motorists are an unavoidable part of driving, and when you are using a rental car, this can be even more worrying. However, when you have purchased Collision Damage Waiver coverage, the anxiety of this is lessened. You could potentially return the car in a completely totaled state and still be safe from the excessive cost you would be expected to pay without CDW insurance.
Cons
- Very Expensive
Your wallet will surely take a beating if you decide to go for CDW, as it can sometimes end up costing you double what you expected to pay for your car rental. While it is true that if you were to damage the rental car you would have to cough up a large amount of money for loss of the use of the car, the initial cost can be quite eye-watering.
- Unnecessary in some situations
You might be pressured into purchasing Collision Damage Waiver coverage that you don’t actually need. For example, if you are taking a short road trip, it might be worthwhile investing in CDW coverage. In addition to this, if you are an experienced motorist who has been driving for many years, it is less likely that you will get into an accident or damage the car. That is not to say that it could not happen, but the probability is less than a new driver who is unfamiliar with the rental car.
When it comes to purchasing Collision Damage Waiver cover, it’s important to ensure that you read through the agreement thoroughly before you commit to it. Be aware of everything that is covered and everything that isn’t. Weight up your options carefully, so you don’t end up investing in something you don’t really need.
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Sources:
- Should You Buy CDW Insurance for Your Rental Car?, Trip Savvy
- Holiday car hire: 10 ways to avoid being ripped off, The Guardian
- What is Collision Damage Waiver in Car Rental?, Rental Cars
