Loss Damage Waiver (LDW) is also perhaps more commonly known as Collision Damage Waiver (CDW). Within the context of car rental insurance, it refers to a type of policy that will cover the renter for damage to the rented vehicle. In the UK it is normally sold with theft cover that will protect the renter against the theft of the vehicle (but not theft of the contents).
With loss damage waiver policies of this type, the rental company is in effect ‘waiving’ or giving up their right to charge the renter for the cost of loss of or damage to their vehicle.
In the UK and many European countries, many car rental companies will quote a rental price to the customer that already includes CDW for the duration of the rental. If the customer is arranging the rental online then the whole thing can be done with one click. Few will give even a passing thought to how much that insurance on its own is actually costing them, whether it is good value for money, whether or not they could have bought the same level of cover elsewhere or even whether or not it is giving them the level of cover they expect.
It may be dangerous to assume that all loss damage waiver policies of this type will cover all of the costs relating to any damage to the vehicle – in fact few if any of the basic ‘in the price’ CDW policies will do so. Many will have exclusions on the most commonly damaged parts of a car such as the windscreen, tyres, roof and undercarriage. This means that in the event of damage to any of these areas it is still the renter who has to pay.
In addition to this most CDW policies will carry what’s called ‘excess’, something that obliges the renter of the vehicle to meet the first part of the costs relating to a claim. Some companies set excesses anywhere between 500 and 1500 pounds, something that means in the event of a claim the renter would have to pay up to this amount before the insurer would contribute to the costs. Most car hire companies will offer for a price, additional insurance sometimes called ‘excess waiver insurance’ that can be used to reduce or remove the excess. It is worth noting that even with such additional cover, the costs of any damage to those items commonly excluded from policies may still have to be met by the renter.
Contrary to what many may believe, the purchase of these types of insurance from the car rental company is not obligatory. It is in fact possible to purchase collision damage waiver or loss damage waiver from direct specialist insurance companies or brokers rather than the car rental company. Many of these companies will offer LDW or CDW policies that include those all-important areas of the windscreen, roof, tyres and undercarriage.
Loss damage waiver policies bought from specialist insurance companies can be purchased on a daily or an annual basis. With this type of insurance it is the policyholder who is insured rather than the rental. The policyholder can therefore use the same policy for any number of rentals within the duration of the insurance. This kind of arrangement can be especially useful if the policyholder plans to rent vehicles on a number of occasions over a specified time period and there could be significant savings when compared to the daily rates charged by car rental companies.
Tags: Loss Damage Waiver