Collision Damage Waiver (sometimes abbreviated to CDW) is a form of insurance that applies to rental cars. It is often referred to in car rental company insurance documents and at times it can lead to confusion though in fact it is quite simple.
When you rent a car you will most likely have various forms of insurance included in the rental price, or purchased separately. As per normal private motoring insurance, these will cover your rental agreement and car usually for three types of mishap.
Third party liability insurance protects you against claims from third parties such as someone you have injured in an accident or someone whose property you have damaged. If renting in the UK the maximum payable under this cover is unlimited by law but in other countries the rental company may impose a financial cap on payouts. You may need to check to ensure that this level is realistic and sufficient for your needs given the high levels of damages that courts can award following an accident.
The vehicle should also be covered for theft.
Finally, the rental car should be insured against damage itself. It is this type of insurance that is called collision damage waiver.
Collision damage waiver insurance purchased ‘as standard’ from a rental company is very likely to contain a number of exclusions and limitations that you need to look out for. Firstly, it usually will exclude from cover damage to various parts of the rented car such as the roof, undercarriage, wheels, windows and tyres. These are all very easily damaged even in minor accidents and the repair costs can be high – particularly as you may have little or no say in when or through whom the vehicle is repaired.
Many basic car hire insurance policies will also have as part of their terms something that’s called the excess. The excess is a normal component of many forms of insurance and it relates to an amount of money that you will have to pay following an accident even if you have the car rental company’s insurance in place. Although it is not restricted to car insurance, the excess amount on many car rental companies’ insurance policies may be high – usually between 500 and 1500 pounds. The stated excess is an amount of money that you may have to pay as the ‘first part’ of any claim.
If you are not happy with the degree of cover offered by the car rental company’s basic collision damage waiver policy, you have two options. You can purchase additional insurance from the car renters. Often called ‘top-up’ insurance, this may reduce the excess payable on the policy and also cover those areas of the vehicle excluded from the basic cover.
Many renters find this additional insurance from the rental companies to be expensive and look to the direct insurance companies and brokers for a more affordable and better alternative.
These companies offer collision damage waiver excess policies online. They work on the basis of covering the gaps in the standard basic insurance available from the rental companies and are usually very significantly cheaper. If you have an accident and have to pay excess to the car rental company, you will be able to claim this back from your insurance policy.
The collision damage waiver excess and associated policies sold by the direct insurers can be purchased on a daily or annual basis. They will cover all vehicles rented by you during the life of the policy, providing you avoid specialised vehicles such as sports cars or those that are over 100,000 pounds in value. It may well be worth your time investigating this option, particularly if you rent cars on a regular basis.
Tags: Collision Damage Waiver