Collision Damage Waiver (CDW), sometimes referred to as Loss Damage Waiver (LDW), is a type of insurance offered by car rental companies as an optional add-on to protect the renter against financial responsibility for damage to the rented vehicle. It provides coverage for the costs associated with repair or replacement if the rental car is involved in a collision, whether or not the driver is at fault.
In the event of an accident, without a Collision Damage Waiver, the renter could be held liable for the full cost of repairing the vehicle, including any related expenses such as loss of use and administrative fees. However, by purchasing a CDW, the renter is granted protection and the responsibility for the costs of repairs is transferred to the rental company.
It is important to note that the CDW typically does not cover all types of damage, such as damage to tires, windows, and mirrors. These exclusions are known as "collision damage waiver exclusions" or "limitations," and they vary depending on the specific terms and conditions of the rental agreement.
While Collision Damage Waiver is often offered by car rental companies, it is not mandatory, and renters have the choice to accept or decline this optional coverage. It is recommended that individuals carefully review their personal auto insurance policy and credit card coverage before making a decision, as they may already provide some level of protection for rental cars.
Overall, a Collision Damage Waiver provides peace of mind for renters by transferring the risk of financial loss due to collision damage from the driver to the rental agency.
