Damage waiver, or as it is often referred to, collision damage waiver or loss damage
waiver, is an optional damage coverage available while renting a vehicle.
In many countries, it is a legal requirement to have CDW insurance included in the basic
car rental rate.
It covers the rental vehicle.
Some companies also offer liability insurance and towing coverage.
Terms and prices vary among car rental companies and locations.
Alternatives include other vehicle insurance policies, some credit card coverage, and some
travel insurance.
Risks addressed Liability.
If the car damages property or injures someone, the customer or other insurance must pay for
the damages.
US car rental companies sometimes include minimum liability insurance required by law
in the basic rental charge.
Hertz includes it in all states except California.
Avis includes it in all states except California and Texas, at least for renters who lack their
own coverage.
Other companies do not publicize where they include liability insurance in the basic rental
charge.
Some car rental companies offer more liability insurance for a fee.
Collision, theft, other damage.
When a customer does not pay the car rental company to waive damage, and a rented car
is stolen, or damaged by accident, vandalism, weather, etc., the customer or other insurance
must pay to the rental company the full cost of repair, plus administrative charges and,
in some states, loss of use.
The rental company's damage waiver normally covers accidental damage and towing a damaged
vehicle, as long as the renter complies with the rental contract.
Waivers may also cover theft, vandalism, loss of use, and liability.
The renter often has a choice among different coverages for different fees.
Damage waivers are not necessarily complete.
They may have deductibles and limits on the amount covered.
Liability coverage always has limits.
The descriptions above come from rental company websites, under headings like Policies, FAQ,
Coverage, or More.
Damage Waivers can be bought from the car rental company in most countries, or through
a car hire excess insurer in the UK, or through travel insurers.
Coverage from the car rental company may be required if the renter lacks proof of coverage
elsewhere.
Insurance or not?
CDW meets the basic definition of insurance, since it transfers some risk from the car
renter to the rental company.
However rental companies do not call it insurance, since it is a waiver between the renter and
the company that the company waives their right to charge the renter for valid damages
to the vehicle.
Rental companies are not licensed or regulated as insurers.
There are also no claims made.
Rental companies treat CDW as a waiver of their right to make the renter pay for damage
to the car.
Credit card coverage of damage waiver Cards issued in the US, and Trinidad and Tobago
Some credit cards offer insurance for theft or damage to rented cars.
Usually any such insurance from a card is "secondary," meaning that if the renter has
any personal or business vehicle insurance with appropriate coverage, that will pay first.
Then the renter can claim from the credit card company to pay the primary insurance's
deductible, plus addressing large claims above the primary insurance limits.
If the renter has no other vehicle insurance for the specific claim, the credit card company
will pay the whole amount, up to its limits.
All four credit card companies listed below cover collision damage with some of their
cards.
The main difference among the cards is that Discover covers nothing else; Visa and some
MasterCards and American Express cards also cover theft, while other MasterCards and American
Express cards include theft, vandalism, hitting a deer or chipping a window.
Other issues important to some renters are that Discover and American Express cover only
the cardholder, not helpful when people share a car rental.
Visa and MasterCard only cover rental contracts of 15 days or less.
Some American Express and MasterCards are not useful on dirt or gravel roads, since
they exclude "damage sustained on any surface, other than a bound surface such as concrete
or tarmac".
Some Discover cards exclude private roads, such as shopping centers and some subdivisions.
MasterCard and Visa in the United States say they cover "Physical damage and/or theft",
but an introductory paragraph for some MasterCards and all Visa cards limits this to "collision
or theft," so vandalism and hail are excluded.
It may be ambiguous whether deer impacts and glass chips are covered as "collisions."
MasterCards from Bank of America and MBNA generally have a simpler opening paragraph,
which leaves coverage in place for any physical damage.
Even among these brands, some cards lack coverage entirely, especially debit cards and cards
with low credit limits.
The AmEx Platinum Cash Rebate card, for example, has no coverage.
MasterCard "Standard" cards lack coverage, while "Premier", "Gold" and "Platinum" cards
vary in their coverage.
Citi® / AAdvantage®, Citi ThankYou®, Citi® Dividend or Citi CashReturns® MasterCard-branded
cards are notable for providing coverage worldwide without geographic exclusions, while most
other MasterCard, Visa and American Express cards exclude coverage in Ireland, Israel,
Jamaica.
These schemes apply to cards issued in the US, Trinidad and Tobago, and apparently nowhere
else.
In addition, no credit card will cover a rental that is being billed to a third party, such
as in the event that an insurance company is being directly billed for the rental.
The following table is an effort at a summary, though not guaranteed.
Coverage is complex and changes periodically.
Telephone staff do not know the changes.
Formal insurance policies govern and are not easily available to cardholders, who are only
given summaries, like the links below.
"Loss of use" and administration fees are often advertised as covered by credit cards.
However, credit card companies pay these items only if the rental car company provides proof.
If rental car company does not provide proof, there seems little reason for the renter to
pay either.
See also Vehicle insurance
References