Car Rental Collision and Loss Damage Waiver Explained

PUBLISHED ON Jan, 20 2023

UPDATED ON Feb, 08 2024

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When you slide behind the wheel of a rental car, you are responsible for it. If you are in an accident or the vehicle is stolen, you will be on the hook for the cost to repair or replace it.

One way to limit your risk when renting a car is to pay for a Collision Damage Waiver or a Loss Damage waiver which caps how much your will have to pay out of pocket if the vehicle is damaged or stolen during your rental.

While a CDW or LDW lowers your risk, it still comes with an excess or deductible that you will have to pay which can run between $500 and $2,500 or more depending on the rental car company as well as the type of vehicle you are renting.

Keep reading to learn everything you need to know about CDW or LDW protection for rental cars.

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What is Collision Damage Waiver (CDW)?

A Collision Damage Waiver or CDW is protection you can purchase when renting a vehicle that caps your financial obligation if the vehicle is damaged in a collision. It should be noted that a CDW is not insurance. While there are a few additional protections you can add to your rental agreement, a CDW is by far the most common.

A CDW will cover the cost to repair your rental vehicle as well as cover any loss of rental income for the rental agency if the vehicle is damaged in a collision. However, it should be noted that a CDW only covers the bodywork of the vehicle, excluding other sections of the rental car.

CDW comes with an “excess” or “deductible” that must be paid by you before the policy will cover the balance of the repair. Basically, with a CDW you are purchasing a cap on how much you will have to pay out of pocket if the rental car is involved in an accident.

While it can vary by car rental company and the type of vehicle you rent, the excess or deductible will usually range between $500 and $2,500 but it can be much higher in some cases.

What damage does a Collision damage waiver cover?

A CDW is designed to only cover damage to the body of the vehicle, it doesn’t cover the interior or mechanical parts. It covers items such as side panels, doors, bonnet, back panel, boot cover and wing mirror housings.

Dealing with Car Rental Damage

 

What does CDW insurance not cover?

A CDW comes with a long list of exclusions. While exclusions can vary by policy, in most cases, the following are not covered by a CDW:

  • Any liability coverage: There is no liability coverage for either bodily injury or property so if you injure a person or a person’s property (their car for example) there is no coverage.
  • Risky driving: Any vehicle damage that is caused by risky driving, off roading, drunk driving or even speeding will not be covered.
  • Loss or theft: If you lose the vehicle or it is stolen, there is no coverage.
  • Glass: This includes all the windows, lights, mirrors, and windshields.
  • Tyres: The tyres and wheels are not covered by a CDW.
  • Personal belongings: Any personal belongings in the vehicle that are stolen or destroyed in an accident are not covered. This includes the boot and glovebox.
  • Keys: If you lose the keys to the vehicle you will have to cover the replacement.
  • Battery: If the battery goes flat or is damaged in an accident there is no coverage.
  • Interior: The entire interior of the vehicle is excluded, this includes seats, steering wheel, carpet, stereo, and any other items in the interior of the vehicle.
  • Additional equipment: Child seats, GPS units, ski or bike racks are all excluded.
  • Towing: A CDW does not cover towing charges.
  • Gears/motor/transmission: The components that move the vehicle, the engine and transmission are excluded from coverage.
  • Agreement violations: If you violate the rental contract and are involved in an accident, the damage would not be covered.

How expensive is a collision damage waiver (CDW)?

Adding a CDW is affordable and in most cases will add between $10 and $30 to your daily rental costs. The cost can vary depending on the type of vehicle you are renting, the area you are renting in as well as the rental firm.

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What is Loss Damage Waiver (LDW)? 

A loss damage waiver or LDW is another layer of protection you can purchase when renting a car. Some rental car companies only offer an LDW, eliminating the CDW entirely. A LDW provides additional loss and theft protection not available with a CDW, including coverage for the vehicle if it is destroyed or stolen. Basically, an LDW is a CDW with the addition of theft protection.

What does loss damage waiver cover on a rental car?

A LDW typically covers the following as long as the terms of the rental agreement have not been violated:

  • Theft of rental car
  • Vandalism damage
  • Collision damage
  • Fire damage
  • Damage caused by acts of nature

What is excluded from an LDW?

An LDW will cover damage to your rental vehicle in most situations but if you have violated the terms of the rental agreement coverage will be denied. These policies do not offer any liability coverage, they only cover the rental vehicle from damage. The following exclusions are typical with an LDW:

  • Any damage that is caused due to the rental agreement terms being violated.
  • Third-party liability or coverage for another person’s injury or property damage.
  • An LDW also comes with many of the same exclusions as a CDW such as windows, the interior, as well as any personal items in the vehicle.

How expensive is a loss damage waiver?

Cost of LDW also depends on factors like the car rental firm, type of rental car, and the place of rent.  LDW also falls in the same price bracket as CDW and will cost you $10-$30 per day. 

Collision Damage Waiver (CDW) Vs. Loss Damage Waiver (LDW)

In a straight up comparison of these two rental vehicle products, in most cases, an LDW is the better option since it offers theft loss for roughly the same price. In addition, the exclusions on both are very similar so you get more bang for your buck with an LDW.

Should you purchase a CDW or LDW when renting a car?

In most countries, a CDW and LDW are optional, they are not included in the price of renting the vehicle. Whether or not you should add this protection to your rental agreement is up to you but here are a few things to consider:

  • If you are not carrying this protection, you may end up having to cover a huge bill to repair or replace the rental car if you are involved in an accident or the vehicle is stolen.
  • If you are assuming your personal car insurance (for your own vehicle) will extend to a rental vehicle, this is not always the case, particularly if you are out of your home country. Always check with your agent when determining whether your policy extends coverage to rental cars.
  • While many credit cards offer damage protection for rental vehicles, this is not always the case, and the coverage can come with many exclusions. Be sure you understand the details of this coverage and any exclusions that apply if you are depending on a credit card for coverage.

What is Super Collision Damage Waiver (SCDW) and Super Loss Damage Waiver (SLDW)?

If you want to take the protection for your rental car to the next level, you may want to consider a Super Collision Damage Waiver (SCDW) or a Super Loss Damage Waiver (SLDW).

These products typically up the coverage, protecting more than just the bodywork of the vehicle. Coverage will vary by rental car company so be sure to read the agreement and fully understand what is covered and what is still excluded from coverage.

In addition, a SCDW or SLDW will lower the excess or deductible that you are responsible for if the vehicle is damaged. In some cases, it may even lower your excess or deductible down to zero. The exact amount you will have to pay will vary by car rental company so check the agreement.

A SLDW will often added additional coverage for items such as replacement of the rented car after an emergency or while it is being repaired.

Damage Waiver Insurance from CarInsuRent.com

Unfortunately, an SCDW or SLDW can be very expensive, in some cases, doubling the cost of your rental and with a standard CDW or LDW you are still looking at covering an excess payment that can range up to $2,500 or more.

A third part party car hire excess waiver insurance will cover the cost of your CDW or LDW excess or deductible payment if you damage your rental vehicle. Third-party car hire excess insurance can be purchased for daily rental hires or you can purchase an annual policy which will cover all your rentals over the year. Rentals are limited to 45 consecutive days.

Car hire excess insurance is very affordable with a CarInsuRent European annual car hire excess insurance policy costing just US$ 89.90 or US$ 115.90 for Worldwide coverage. This policy will cover your excess or deductible cost up to $2,500 on any of your rentals over the year. Daily trip excess insurance is also available.

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FAQ

What is collision damage waiver insurance for car rentals?

A collision damage waiver is optional protection that you can purchase from a car rental agency when you are renting a vehicle. It covers damage to the bodywork of your rental vehicle as well as any losses the car rental company experiences due to their vehicle having to be repaired.

A CDW is not an insurance policy, it simply limits your out-of-pocket costs if the vehicle is damaged while you are renting it. While it varies by rental car company in most cases, your excess or deductible will be limited to $2,500 or less but it can be much higher in certain situations.

What is an LDW?

A loss damage waiver or LDW combines the benefits of an CDW with theft protection. It offers all of the protection of a CDW but will also limit your out-of-pocket costs if the rental vehicle is stolen.

Is it possible to purchase annual collision damage waiver insurance?

No, a collision damage waiver is only offered by rental car companies for rental vehicles, it’s not an everyday car insurance product. CarInsuRent does offer standalone annual multi-trip or daily car hire excess waiver insurance which will cover your CDW or LDW excess or deductible costs.

What is the loss damage waiver for a rental car?

A Loss damage waiver (LDW) is additional protection for your rental vehicle that you can purchase when renting a vehicle. An LDW will limit your out-of-pocket costs if the vehicle is damaged, lost or destroyed due to theft, vandalism, a collision, or natural forces.

Is Collision Damage Waiver the same as car insurance?

No, a CDW is not insurance, it is added protection that rental car companies (who cannot legally sell insurance policies) offer to their renters.

A CDW is designed to cap your out-of-pocket costs if a rental vehicle is damaged while in your possession. Instead of having to cover the entire cost of repairing the vehicle as well as any losses the rental car company experiences while the vehicle is being repaired, you will only have to pay the agreed upon excess or deductible outlined in the CDW which typically falls between $500 and $2,500.

About the author:

Mark Vallet have over 15 years’ experience writing about insurance and automotive subjects. Mark have written for autos.com, carsdirect.com, YourMechanic.com, and is also a regular contributor to carinsurance.com, insure.com and insurance.com. His work has been published online at MSN, Yahoo Autos, Fox Business, Business Insider Australia and more.

 

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