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What Is Damage Waiver

The damage waiver – rip-off or essential?

If you’ve ever hired a car here or abroad you will of not doubt been offered a Collision Damage Waiver (or CDW) to go with your hire.

But what is it? Is it an unnecessary charge on top of your rental or are you even insured without it? – Let me try to take the confusion out of one of the rental industries most contentious charges.

Firstly, you need to know that the CDW is not insurance. No rental company is going to let you drive out of their premises in their shiny car without proper insurance. Fact.

The rental company will have a fully comprehensive insurance policy that covers both them and you in the event of something unfortunate happening whilst you hire. This policy will, like your own policy on your own car, have an excess. The excess is the amount you pay towards the repair costs should you have an accident.

By offering you the CDW the rental company will normally reduce the excess they pass on to you. Crucially this doesn’t reduce their own excess with their insurers. Effectively they are saying that for the extra cost they will take the risk instead of you.

But why would they want the risk instead? The theory is that nobody actually chooses to damage their vehicle and most actually come back unscathed, meaning (hopefully) that they will earn enough from these CDW charges to cover their own costs when someone finally does have an accident. If they sell enough they should have a surplus of cash.

Clear? So next time you are offered the damage waiver you have a simple choice to make – for a bit extra do you let the rental company take the risk or do you take the gamble yourself?

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