Basic waiver for damage: Collision Damage Waiver

When you hire a car, the deal usually includes cover in case the vehicle is damaged in an accident. This is called Collision Damage Waiver (CDW). Technically, it's not insurance: the rental company is simply 'waiving' (giving up) its right to charge the renter for the full cost of certain types of damage. As a renter, you'd pay just the excess (called a 'deductible' in the USA) if there was any bodywork damage.

The excess works like an insurance excess. In general, the size of the excess could be anything between £500 and £2000 (or even more, in some cases) - the larger the car, the larger the excess. If the rental car is damaged during your rental, you will have to pay the excess, and the company will pay for the rest of the repair costs. To find out more, see What is an 'excess' in car rental?

Collision Damage Waiver does not cover every part of the car. Car rental companies typically exclude any damage to the windows, lights, engine, gears, tyres, interior and undercarriage of the car. If (for example) you hit something and damaged your windscreen, exhaust or undercarriage, you would pay the full cost of repairs, not just the excess. To find out more, see Which parts of a hire car does Collision Damage Waiver cover?

Theft Protection is also a waiver and again there will be an excess. If the car is stolen you will pay only the excess, not the full cost of the car. Your rental agreement might include Loss Damage Waiver (LDW) instead of CDW. The names are confusing, but LDW is usually a combination of Theft Protection and CDW.

Does it matter if it's a waiver or insurance?

From a renter's point of view, Collision Damage Waiver, Loss Damage Waiver, and Theft Protection work in pretty much the same way as ordinary car insurance.

However, normal car insurance is provided by regulated insurance companies. Waivers are provided by the rental company themselves. Waivers are not legally regulated in the same way insurance is. The price of insurance is regulated, and there is an independent body to check that the policy works effectively.

Invalidating your waivers

A waiver won't cover you if you do something you shouldn't. You can invalidate it if you break the law or go against the terms and conditions of the rental agreement, just as you can invalidate any insurance policy. If, for instance, you crash the car while you're over the legal alcohol limit, you will not be protected by CDW and will pay the full cost of any repairs. Similarly, if the car rental agreement does not allow you to drive across a border, you would not be covered if you took the car from, say, France into Spain and then had an accident in Spain.

Insuring your rental car

If you're keen to have officially regulated insurance for your rental car, you can buy it separately. To find out more, see What's the best way to insure your rental?