Should You Buy Collision Damage Waiver Insurance for Your Rental Car?

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Whether or not you need to purchase collision damage waiver coverage depends on your rental car needs, location, and payment method.

What Is Collision Damage Waiver Coverage?

When rental car company customer service representatives ask you to purchase Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) coverage, they are asking you to pay a certain amount per day in return for a lower deductible payment if the rental car is damaged or stolen.

The amount you pay varies by location and type of rental car. Taking (and paying for) CDW coverage can add 25 percent or more to the total cost of your rental. In some countries, such as Ireland, you may be required to purchase CDW coverage or provide proof of alternative, equivalent coverage to rent a car at all.

Buying CDW coverage can save you money if your rental car is damaged. If you do not purchase CDW coverage and something happens to your rental car, you could end up paying the rental car company a lot of money. The deductible on your rental car could be quite high—in some cases, well into the thousands of dollars. You may also have to pay the rental car company for the loss of use of that car while it is being repaired. 

On the other hand, CDW coverage can be quite expensive. In some cases, it can nearly double the cost of renting a car. If you are only driving your rental car a short distance or for a day or two, buying CDW coverage might not be worthwhile—unless, of course, you get into an accident.

The bottom line: You will need to read your entire rental car contract. Carefully weigh the pros and cons of paying for CDW coverage when you select your rental car. However, you may have alternatives available to you if you do not wish to buy CDW coverage.

Alternatives to Buying CDW Coverage

Coverage From Credit Card Companies

Your credit card company may offer CDW coverage, provided you pay for your rental with that credit card and decline the CDW coverage the rental car company offers you. If you choose this option, be sure to read your credit card company's terms and conditions before renting a car. Some credit card companies offer coverage only within the United States, while others exclude specific countries. Nearly all credit card companies exclude car rentals in Ireland, although American Express added Ireland to its list of covered countries in July 2017.

Automobile Insurance Coverage

Read your auto insurance policy or call your insurance company to find out whether your automobile policy includes coverage for damage to a rental car. Some US states, such as Maryland, require automobile insurers to provide this coverage. If your policy covers rental car damage, you do not have to pay your car rental company for CDW coverage when you rent a car. Be sure to check for exclusions, such as car rentals outside the United States and car rentals in Ireland.

Coverage From Travel Insurance Providers

You may be able to purchase CDW coverage from a travel insurance provider when you insure your trip. Several travel insurance providers offer Rental Vehicle Damage coverage, which you may buy if you want to decline the CDW coverage offered by your rental car company. This type of coverage only applies in specific situations, including vehicle theft, riot, civil unrest, natural disaster, collision, and vehicle upset.

Some situations, including driving while intoxicated, are specifically excluded from Rental Vehicle Damage coverage. Most travel insurance providers will not sell Rental Vehicle Damage coverage for certain types of rental vehicles, such as motorcycles, vans, and campers.

If your car rental company requires you to have coverage for other situations, such as cracked or broken window glass (common in Ireland), you may not be able to substitute Rental Vehicle Damage coverage for the CDW.

You generally cannot buy Rental Vehicle Damage coverage by itself. Rental Vehicle Damage coverage is usually bundled together with other types of travel insurance.

You can request a quote for a travel insurance policy directly from an underwriter, such as Travel Guard, Travelex, HTH Worldwide, MH Ross Travel Insurance Services, or from an online insurance aggregator such as SquareMouth.com, TravelInsurance.com, or InsureMyTrip.com.

Be sure to read the entire travel insurance policy and the accompanying list of exclusions before you buy.

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