Loss damage waiver is a term used to describe a form of insurance that applies to rental cars. It may sometimes also be referred to as CDW (Collision Damage Waiver).
At the time a car is rented, the renter will usually want to be sure that he or she will be covered by insurance against the two main categories of risk. These two categories are damage or injury caused to other people and damage caused to the rented car itself. Insurance to cover the first of these is usually called third-party liability while the second is called loss damage waiver.
The latter may be included in the rental price or the car rental company may offer it for sale separately. In either situation, the car rental insurance sold by rental companies is usually very significantly more expensive that similar insurance purchased elsewhere. Not only that, it is often also the case that this type of insurance is, when provided by the car rental company, limited in terms of its cover.
The loss damage waiver insurance sold by rental companies will probably contain a number of exclusions relating to damage incurred to specific areas of the rented car. These usually include the undercarriage, wheels, tyres, roof and windows. These are all areas easily damaged and if not covered by the loss damage waiver, the renters could find themselves needing to pay out some hefty sums.
It’s also the case that the car rental company’s policy will also carry excess. Excess is an insurance term used to describe an amount of money that the renter may have to pay towards the cost of an insurance claim. It’s often set between 500 and 1500 pounds. In the case of a claim for 1500 pounds and a policy that has 1000 pounds excess, it is the renter that would have to pay the first 1000 pounds of the 1500 pounds claim.
When viewed together the risks constituted by the rental company’s exclusions and excess on their standard loss damage waiver policies can make renters uneasy. If that’s the case, they can do one of two things.
It may be possible to pay the car rental company extra for what is sometimes called ‘top-up’ insurance – this can though prove to be very expensive compared to the second route.
It is also possible to purchase this type of cover from direct insurance providers over the Internet. Their policies will cover things such as excess payments or damage to ‘excluded’ areas of the car. The renter may still have to pay these to the rental company but their direct insurance would reimburse them.
The loss damage waiver insurance purchased from a direct provider has another major advantage apart from lower cost. It can be purchased on a daily or annual basis meaning that it would cover any rented vehicle during the lifetime of the policy, although this may exclude certain specialist vehicle types as outlined in the terms and conditions. So, if you don’t enjoy paying more than is necessary, this could be an option well worth investigating further.
Tags: Loss Damage Waiver