Should You Get a Collision Damage Waiver When Renting a Car?

You just got off a plane after an eight-hour layover and very little sleep. When you go to pick up your rental car, the reservation agent offers you the option of buying a a collision damage waiver (CDW). You hear the agent say that a CDW is "similar to insurance" and "additional fee," so you decline. Did you make the right decision?

In this article, we'll explain how a CDW works, the pros and cons of getting one, and other ways you can get insurance coverage for a rental car.

What Is a Collision Damage Waiver?

When you rent a car you promise to return it to the rental car company in the same condition it was in when you picked it up. If the car is damaged in a rental car accident, you're responsible for paying to repair or replace the car. When you purchase a collision damage waiver from a rental car company, the company agrees to waive any vehicle replacement or repair costs in exchange for a fee (typically around $15 to $30 per day). Some CDWs also cover theft, depending on the rental car company.

A CDW covers physical damage to a rental car and usually covers towing and administrative costs. A CDW may also cover "loss of use" fees, which are fees a rental car company can charge you for each day a damaged rental car is out of commission. A CDW will often cover the cost of repairing or replacing a rental car without you having to pay a deductible.

A CDW covers damage to the rental car, but it doesn't cover anyone's injuries or medical bills or damage to other people's property.

Your decision to purchase or decline a CDW will likely depend on whether you have coverage that overlaps with a CDWs, your tolerance for risk, and your budget.

Pros of Getting a Collision Damage Waiver

A collision damage waiver helps you:

• shift most vehicle repair and replacement costs from you to the rental company
• cover the rental car company's "loss of use" fee
• avoid having to pay a deductible
• dodge a potential insurance rate hike if you use your own insurance to cover rental car repairs, and
• minimize the hassle of dealing with your insurance company.

Cons of Getting a Collision Damage Waiver:

A collision damage waiver isn't cheap and you might not need it if you're already covered. A CDW:

• increases the cost of a rental car
• offers limited coverage (a CDW might not cover certain parts of the car, like damage to the windshield or tires)
• often duplicates coverage you already have, and
• doesn't cover other people's property or anyone's injuries or medical bills.

Collision Damage Waiver Alternatives

Credit card companies, travel insurance, and car insurance policies offer alternatives to collision damage waivers.

Your Car Insurance Policy

If you own or regularly drive a vehicle, you probably have personal car insurance and don't need to purchase more from the rental car company. Most personal insurance policies provide coverage that overlaps with rental car insurance. But insurance policies vary. Review your policy and verify that you're covered before you decline a CDW.

If you're traveling for business, ask your company about insurance coverage. Your personal insurance will most likely not cover your rental car if you're using the rental car for commercial or business purposes.

Learn more about car accidents and insurance coverage.

Your Credit Card Company

Many credit cards offer some insurance coverage for rental cars. You'll have to pay for the rental with the credit card to qualify for coverage. Coverage varies from card to card. Before you rent a car, call your credit card company to find out exactly what's covered. Make sure the coverage limit is high enough to protect you and call each time you rent a car because credit card rental insurance policies change frequently.

Your Travel Insurance Policy

Some travel insurance policies offer rental car collision coverage, which covers the cost of repairs if your rental car is damaged in a collision, regardless of fault. You'll likely have to pay extra for it, so be sure you actually need it before you buy it.

Protect Yourself by Getting the Right Coverage

You don't have to purchase the collision damage waiver offered by the rental car company. But you do need to make sure you're not going to get stuck having to pay out of pocket for damage to your rental car. Take a look at your insurance policies and credit card agreements before you decline coverage.

If you're involved in a rental car accident, talk to a lawyer. A rental car accident is more complicated than an accident in your own car. A lawyer can answer your questions and advocate for you with the car rental company and insurance companies.

Learn more about hiring a car accident attorney. You can also connect with a lawyer directly on this page for free.