DEFINITION of 'Collision Damage Waiver (CDW)'

Additional insurance coverage offered to an individual renting an automobile. A collision damage waiver, or CDW, is optional, with the cost of the waiver dependent on a variety of factors, including the type of rental car and where the car is being driven. The waiver typically covers losses from the theft of or damage to a rental car, but is unlikely to cover bodily injury caused by an accident.

BREAKING DOWN 'Collision Damage Waiver (CDW)'

Renters that purchase a collision damage waiver pay an additional daily fee on top of the rental car fee. The CDW provides a level of protection for the renter that covers damage to the rental car. If the car is damaged then the renter is not responsible for some or all repairs, as well as for any loss of use fees that may accrue while the rental car is being repaired.

Collision damage waivers are often offered by car rental companies on several occasions during the rental process. Renters are typically offered a CDW when they reserve the automobile, as well as during the process of picking up the rental car. In most cases the renter has to specifically indicate that he or she is declining the optional coverage.

Credit card companies may offer CDW for cardholders that use their credit card to rent a car. Depending on the terms and conditions of the credit card policy, CDW offered by the company may be considered in addition to or supplemental to any other insurance that the renter may have, such as a regular automobile insurance policy.

Insurance requirements that have to be met by car renters varies by state and by country. In some cases, the renter can decline CDW coverage while not being required to provide proof of other insurance, such as from a credit card or with an automobile insurance policy. In other cases the renter may be required to purchase the collision damage waiver if he or she cannot prove an alternative form of insurance coverage.

RELATED TERMS
  1. Property Insurance

    A policy that provides financial reimbursement to the owner or ...
  2. Lease Option

    An agreement that gives a renter the choice to purchase a property ...
  3. Comprehensive Insurance

    A type of automobile insurance that covers damage to your car ...
  4. Business Auto Coverage Form

    A form that insurers provide to business owners when creating ...
  5. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  6. Water Damage Legal Liability Insurance

    A policy that provides financial protection to a person or business ...
Related Articles
  1. Insurance

    The Facts About Rental Car Insurance

    Find out if the extra insurance is really worth it.
  2. Managing Wealth

    This Is When You Should Pay Car Rental Fees

    Rental firms are fee-happy, so you’ll be pressured into all sorts of extras when you pick up your car. Decide in advance which options make sense for you.
  3. Insurance

    What Does Renter's Insurance Cover?

    Renter's insurance is supposed to cover a tenant's personal property as well as liability claims, but not all policies deliver.
  4. Personal Finance

    8 Things You Need To Know Before Renting A Car

    There's a lot you may not know about renting a car. Knowing these tips will save you money while still getting where you want to go.
  5. Insurance

    Renter's Insurance: A Comprehensive Guide

    Everything you need to know about renter's insurance.
  6. Managing Wealth

    Are You Over-Insured?

    You can free up a lot of money by eliminating overlapping insurance policies. Read on to learn where you are most likely to be carrying double coverage.
  7. Insurance

    6 Best Renters Insurance Providers

    Here are six companies that consistently offer excellent renters insurance at competitive rates.
  8. Insurance

    Top Tips for Cheaper, Better Car Insurance

    Accident, theft, vandalism - make sure your coverage will protect you when you need it most.
  9. Insurance

    How to Find the Right Car Insurance

    Finding the right car insurance can be difficult. However with these strategies, you can get the most for your money, protect your assets and your health.
  10. Investing

    Reasons Renting Is Better Than Buying

    Owning a home is much more expensive than renting. Here are the places where the costs differ greatly.
RELATED FAQS
  1. Can I get renters insurance without a lease?

    Find out whether you need to have a lease before you can get renters insurance. Learn about policy coverage and what information ... Read Answer >>
  2. How much renters insurance do you need?

    Learn how much renters insurance you need to replace your belongings and how to calculate exactly how much is necessary to ... Read Answer >>
  3. Why might landlords require renters insurance?

    Learn why landlords may require tenants have renters insurance, and find out what type of coverage landlords can request ... Read Answer >>
  4. Does renters insurance cover jewelry?

    Learn what kind of coverage renters insurance provides for your jewelry, and find out what steps you can take to optimize ... Read Answer >>
  5. Can roommates share renters insurance?

    Learn how roommates could share a renters insurance policy in some states and how that could lead to issues during the claims ... Read Answer >>
Hot Definitions
  1. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  2. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  3. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  4. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  5. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
  6. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
Trading Center