Collision Damage Waiver Insurance (usually shortened to CDW Insurance) protects you when hiring a car against the financial costs of damage to the rented vehicle.
It usually forms part of a trio of insurances that most renters wish to know is in place.
The first offers third party liability insurance where a third party says you have damaged them or their property with the rented vehicle. The second covers the vehicle against loss through theft. The third is CDW insurance and that protects you against the costs of damage to the rented vehicle.
Although the principles of CDW insurance are simple, there are some complexities that you may wish to consider when hiring a car.
In many countries the basic rental price will include some form of third party insurance and theft insurance. It may also include a basic form of CDW insurance. Unfortunately the position is not standardised by country or rental company, so what insurance is or is not included ‘in the rental price’ can vary. In most European countries the above will be the case whereas in the USA the basic rental price may include no insurance at all. In the final analysis, you will need to carefully check with the rental company to see what insurance is included in the basic deal.
If CDW insurance is not included in the rental price, the rental company will very probably try hard to sell it to you as an optional extra. Whether the rental company’s CDW insurance is included in the base price or purchased separately, it would be sensible for you to check the level of cover provided and any exclusions.
Two things usually to examine carefully are the excess and damage area exclusions.
The excess is stated as a financial amount that you will need to contribute towards the cost of any repairs etc following an accident. The excess is usually between 500 and 1500 pounds and it is the amount that the rental company could charge to your credit card following an accident.
The exclusions usually relate to parts of the rented car that the rental company’s basic CDW will not cover and these typically include roofs, wheels, tyres, undercarriage areas and windows. If these areas are damaged in an accident, the repair costs will be charged to your credit card.
If the excess and exclusions make you feel uneasy and financially exposed, you do have two ways of dealing with them. The first option is to buy ‘top-up’ insurance that the rental company will probably offer you. This can reduce the excess payable on the basic policy and it may also cover those areas of the vehicle normally excluded. The downside here is that this additional insurance typically is expensive if purchased from the rental company and it will certainly be considerably more expensive that the same cover purchased from the general insurance marketplace.
The alternative is to purchase online CDW Insurance from a direct insurer or broker. The policies offered by these companies will reimburse you for any excess payments you need to make to the car rental company and they will usually also include cover for those areas of the rented car that the rental company may exclude.
CDW Insurance purchased from these sources is typically significantly cheaper than that offered by the rental companies. It is sold on a daily or annual basis and will cover you for any vehicles rented during the life of the policy providing these are not highly specialised (e.g. sports vehicles) or very high value cars (usually 100,000 pounds and above).
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