CDW Insurance

CDW insurance stands for Collision Damage Waiver insurance. It is a term that might be unfamiliar to a number of UK drivers, more accustomed to the basic distinctions between third party, third party, fire and theft, and comprehensive insurance cover available on their domestic motor insurance policies. CDW insurance, on the other hand, is widely used in the car hire industry around the world to provide cover for the person renting the car against the risks of loss or damage to the hired vehicle.

Together with the minimum level of insurance against claims by third parties and the risk of the vehicle being stolen, the Collision Damage Waiver generally represents the basic insurance package that will be offered by the car rental company with the vehicle. Like many things in life, however, covering just the minimum requirements is rarely enough for decent peace of mind. This is true of CDW insurance.

First and foremost, CDW insurance is designed to give the hirer of the vehicle a degree of financial protection in the event of his or her damaging the vehicle in a collision - the insurance will indemnify the hirer against the worst of the repair costs. However, it is not what UK drivers, for example, would recognise as comprehensive insurance. With typical CDW policies, several areas of damage are specifically excluded from the cover. These areas include damage to the roof and the underside of the vehicle as well as repairs to broken, cracked or chipped glass windows, and punctured or otherwise damaged tyres and wheels.

Another major consideration to bear in mind with respect to CDW insurance is the excess it usually attracts. The excess, of course, is the proportion of any repair bill that the policy holder must pay him or herself. In the event of any claim under the CDW insurance, the excess represents an uninsured portion of the loss or damage. Still worse from the policy holder's point of view is that, in the event of any claim for repairs, it is the excess paid by the policy holder that must be paid first. The effect of this is that if the repairs cost less than the excess, then the policy holder will be footing the entire bill for the repairs. Clearly, this is an important consideration, especially since the typical excess on the CDW insurance for a car rental in the UK, for example, is likely to be at least £600 - and possibly more.

To reduce this liability, therefore, most customers take up the offer of the car hire company to purchase further insurance - CDW excess insurance - in order to remove or reduce the amount of excess on the CDW insurance. However, all of the shortcomings of the rental company's CDW insurance can be avoided entirely by purchasing a complete insurance package for the car hire in advance, from a specialist insurance provider. Not only will such an independent provider quote a far more competitive rate (up to half of that quoted by the car rental company), but the insurance provided is likely to be considerably more comprehensive in its scope.