Collision damage waiver (or CDW) is a form of insurance that applies to car rental and car rental insurance cover. It is easy to become a little confused by the various insurance options, terms and conditions that car rental companies often brandish around. This confusion can easily mean unnecessary expense so it may be worth taking a minute to consider the insurance position with respect to rented vehicles.
If you are driving a rented vehicle, you have two different types of risk that you probably will need insurance to cover. The first type is third party liability. If you have an accident that results in injury to another person or damage to their property, you will have to pay from your own finances unless you have third party liability insurance in place. Remember – court awards to third parties following an accident can be very high so it is usually advisable to check carefully that the insurance is in place and adequate for your needs.
The second type of risk is related to damage to the rented vehicle itself. Even a small accident could result in bodywork damage running into thousands of pounds/dollars/euros. Once again you will have to pay this yourself unless you have insurance in place.
The insurance that covers damage to the rented vehicle is called collision damage waiver (CDW) or sometimes it may be referred to as loss damage waiver. This insurance will cover some forms of damage to the rented vehicle.
It is difficult to generalise about what sorts of insurance will be included in the rental price because practices here vary by rental company and the country of rental. You will need to check the specifics of this on a rental-by-rental basis.
If collision damage waiver is not included in the basic rental price, the rental company will usually offer it as an optional and chargeable extra. Whether it is included or not, it probably will contain two limitations. It may well exclude damage to certain areas of the vehicle such as the tyres and wheels and additionally it may carry excess.
The excess is the first amount of any claim that you the renter will be expected to pay. The amount here may be anywhere between 500-1500pounds sterling.
Most car rental companies will again offer ‘ top-up’ insurances that may allow you to increase cover to other areas of the vehicle excluded from basic CDW as well as reducing the excess amount. These top-up insurance can prove expensive.
It may be worthwhile looking closely at the collision damage waiver and collision damage waiver excess policies offered by direct insurance companies and insurance brokers. These policies will cover you against many of these risks and frequently offer additional benefits such as increasing the level of third party liability.
They work on the basis that the policy is sold to the policyholder for a period of time, typically daily or annual. They will cover all vehicles rented by the policyholder during that period. Should an accident arise, the policyholder may still need to pay the car hire company the excess but this can then be claimed back from the insurance company.
Collision damage waiver insurance purchased from a general insurance company or broker online will usually be significantly cheaper than if the same insurance is purchased from a car rental company. It may well be worth a look.
Tags: Collision Damage Waiver