Auto Insurance Coverage

CDW Insurance Defined


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When you go to the rental desk, one thing you might see on the contract is CDW insurance—and if you look closer, it may turn out you're paying quite a lot for it. But what is this element of rental car insurance?

What Is a Collision Damage Waiver?

The collision damage waiver protects the borrower of a rental car against a lot of contingencies. It's part of what a rental car agency offers the driver, in case something happens to that vehicle, which the driver may not have been able to afford on the market. Rental vehicles tend to be in premium condition, and so they have a lot of value. That's where a temporary CDW ensures the vehicle for the specific length of the rental.

What a CDW Can Do for You

The rental car insurance that you get at the counter, including the CDW, is specially designed for covering the use of the car during the rental period. It generally covers all of the "dings" that might happen to the rental, so that you as a private owner would not pay for fixes. Other collision damage is also covered, and this is important, since many drivers would not be able to afford the costs of wrecking a rental. However, what car renters should know is that they may be able to get decent rental car insurance through the existing policies that they use to operate the cars they own. These standard rental car insurance additions can be a small fraction of what the rental company is charging for a CDW.

Some of those who end up at the rental car desk may want to know about CDW insurance. This kind of insurance product is not an actual policy, but a specific agreement between the driver and the rental car company. If you're going to rent a car for any period of time, it's in your best interest to know about all of this terminology because you will be signing paperwork at the desk that deals with exactly these kinds of products. Knowing more can help you save money and negotiate with the rental car representatives.

One thing about the collision damage waiver is that insurance companies offer is that drivers can often choose coverage for vandalism, theft, etc. according to how much they want to pay.

A driver is only going to operate that rental car for short time, but within that time, anything can happen. The extra security of a CDW can be the most effective way to get comprehensive insurance against any kind of incident for a short-term rental.

As mentioned above, the CDW is not a specific policy, but a waiver, which is just a kind of insurance product. As such, it is not subject to some of the rules about insurance policies.

A CDW can be quite expensive, up to 20 percent or more of the total rental cost. Drivers can often get cheaper options by getting coverage for their rental car through their own insurer. Put in a call to your regular auto insurance company before accepting the high costs of the collision damage waiver or any other waivers at the rental desk. The rental company will not tell you that you have cheaper alternatives; they want you to buy their insurance products. Make sure you consider all the costs up front to make the best deal.

Some rental companies have been known to add on extras like collision damage waivers after the fact, when a driver brings the car back to the company location. Specify up front that you will not pay for extras, and read your bill carefully to make sure that the company doesn't slip this product into your bill.

In many cases, a driver can actually get the same or better coverage from their own regular auto insurance company, at much better rates than those that come with the CDW and other insurance offered at the counter. Shopping between your current auto insurer and the rental agency’s offer is one of the best and easiest ways to save a lot of money in choosing CDW or other options that will cover your operation of your rental car.

Another way to save money on a CDW is to look at how you would pay on shorter or longer term rentals. You may find that a longer-term rental may bring the per diem CDW costs down. On the other hand, it might be better to go with a shorter term rental, even renting for two specific non-concurrent days separately, to save on insurance costs.

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