CDW insurance - collision damage waiver insurance or loss damage waiver insurance as it is also sometimes known - is peculiar to the world of hire cars and can differ from the standard motor insurance policies many people might be familiar with when driving at home. The differences can be important in some respects and this makes it more important than ever to check exactly what cover is being provided when you purchase CDW insurance from a car rental company.
In fact, the concept of a "waiver" was something introduced by car rental companies, which are generally not licensed by the financial regulators of their respective countries from selling insurance. The waiver, more strictly speaking, therefore, is an agreement by which the rental company waives its right to make the hirer of one of its vehicles entirely responsible for any loss or damage to it. From the customer's point of view, however, the collision damage waiver - or loss damage waiver, as it is also known - is to all intents and purposes a form of insurance.
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Nevertheless, CDW insurance retains some distinctive features that it will be important for anyone hiring a car to be aware of. Although most forms of motor insurance have an excess, for example, the excess applying to CDW insurance tends to be higher -anything from the equivalent of a few hundred pounds to more than a thousand pounds in some parts of the world. Just as with regular motor insurance, the CDW insurance excess represents that part of any repair or replacement bill that remains the hirer's responsibility - or, to put it another way, that part of the rental company's right that has not been "waived".
A further idiosyncrasy of most CDW insurance is that it specifically excludes cover for damage to the wheels or tyres, glass or windows, and roof and underside of the vehicle. However, exclusion from the provisions of the CDW makes these areas of the vehicle no less vulnerable to accidental damage and, in any such event, the hirer could find him or herself solely responsible for paying for any repairs.
Because of these exclusions and the size of the excess that frequently applies to CDW insurance, many drivers take up the option of purchasing additional, or "top up" forms of insurance cover. The car rental company itself, for example, will probably offer the option of buying "super CDW insurance". Although these insurance packages can reduce the excess to zero, they usually continue to exclude claims for damage relating to the tyres, windows, roof or underside of the vehicle. Alternatively, a damage excess waiver could be bought from an independent broker at rather less cost, although even these can continue to exclude damage to particular areas of the vehicle.
Probably the most complete all-round insurance, however, is excess insurance from an independent specialist hire car insurance provider, which not only covers the CDW insurance excess but also extends insurance cover to damage to the hire car's roof, underside, windows or glass and wheels or tyres.
About CDW Insurance
Simon Vella is Chief Executive of Insurance4Carhire an independent specialist broker dedicated to providing their clients with the best deal on their CDW insurance and car hire insurance.
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