Collision Damage Waiver (CDW) coverage can be purchased at the rental agency counter – and there may be a strong sales pitch to buy. What is this CDW, and is it necessary? Are there alternatives to giving in to the sales pressure from car rental agencies?
What is the Collision Damage Waiver (CDW)?
Even though it's sometimes loosely referred to as "rental car insurance," CDW is not insurance. Rest assured, the rental company has their vehicles insured. But by making whoever drives the rental responsible for loss or damage, the agency can pass the cost of insurance premiums on to the renter, and reasonably so, since the renter is temporarily in charge of the vehicle.
In issuing CDW, the rental company agrees to waive (excuse) the renter's responsibility. The renter pays the CDW fee, and they'll let the renter off the hook for any damage.
Note: The terminology in this article is oriented towards US and Canadian consumers.
Is CDW Necessary?
Well, it's not necessary to buy it from the rental agency. That's why they have the little box to indicate that the renter has been offered the product but has declined it. But the renter is strongly advised to have some form of insurance coverage, so as not to be liable for the entire cost if a rental vehicle is stolen or damaged.
There are a number of options for CDW and alternate insurance coverage. Two of those options are discussed here: Travel Miles and Personal Insurance.
In this article series, all pricing is for a compact car such as the Nissan Versa or similar for pickup at the Las Vegas airport. Pricing is accurate at the time of writing, but the reader should note that:
- Pricing is subject to change.
- Taxes vary by state and province.
- More expensive vehicles will cost more.
Travel Miles and Collision Damage Waiver
Some travel miles (frequent flier, etc.) companies will offer CDW as part of a car rental booking. If it's included in the travel plan membership, that's a terrific bargain. If there's an extra charge, think it through.
Air Miles®, the Canadian travel miles reward company, to give one example, offered CDW coverage for $14/day CAD plus tax for a Nissan Versa, anywhere, compared to $34.99/day USD plus tax at the Alamo rental counter at McCarran Airport (LAS) in Las Vegas. Both plans had no deductible. However, the Alamo CDW is inclusive (fees, admin costs) to the full replacement cost of a new vehicle, while the Air Miles plan may not provide the same level of coverage (the Air Miles agent to whom Suite101 spoke could not access the entire insurance policy).
Cost of one-week rental: $112.00 CAD + tax. Looks like a better deal than the rental agency at $244.93 USD + tax, especially if coverage is similar.
Personal Insurance Coverage for CDW
Depending on the renter's coverage on her personal vehicle, this may be the best and most cost-effective choice.
The type and amount of coverage on the personal vehicle is transferred to the rental vehicle:
- Same deductible as the personal vehicle
- Same exclusions and limits as the personal vehicle
- Personal liability to the same level (recommended minimum is $2 million)
- Property damage (third party coverage) to the same limit
- Exclusions (windshield breakage, for example)
A note of caution: the rental agency may cover full replacement cost in the event of a write-off, while the personal auto policy may cover only blue book (depreciated) value.
A renter who has good coverage with a low deductible should call the broker to confirm the extent and type of coverage. It may be possible to add an inexpensive rider for comprehensive, replacement value, or glass for the period of the rental.
Cost of a one-week rental: $0.00 (Included in current insurance premiums).
It's quite okay to decline CDW coverage. In the event of a claim, simply say, "Call my insurance agent."
Note: This article is for information only and does not constitute professional advice.
Further Reading on Collision Damage Waiver
- Rental Car Insurance – What is CDW? – A more detailed look at what CDW is and what it does.
- Rental Agency vs Credit Card for CDW Coverage – Examines two other alternatives in more detail.
Thomas Alan Gray - Tom has been writing for over 30 years; curiosity leads him to dig into a wide variety of topics.
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