If your head tends to spin after a car hire agent explains the extra insurance options when hiring a car, I’m here to help. A collision damage waiver (CDW) is an agreement where a car hire company waives its right to charge you the full cost of damage to a hire vehicle.
It is not technically insurance, it simply limits your financial responsibility if the car is damaged or stolen while in your possession.
In this article.
- What is a collision damage waiver?
- How collision damage waiver works.
- What does CDW insurance cover?
- CDW coverage breakdown.
- How much does it cost?
- Is CDW worth it?
- Alternative options to a collision damage waiver.
- FAQs.
What is a collision damage waiver (CDW)?
Collision damage waiver insurance (CDW), also known as a loss damage waiver, is an agreement where the car hire agency waives its right to charge a high excess for damage to a hire car. It is not so much insurance as a guarantee the hire company will pay for any damages to their vehicle.
How collision damage waiver works.
Here’s the process step by step:
- You rent the car: When you book or collect your hire car, the CDW is either included in your rate or offered as an optional extra.
- The waiver is applied: Once accepted, the CDW reduces your financial liability if the vehicle is damaged or stolen during your rental period.
- An excess still applies: Even with CDW in place, you’ll typically be responsible for paying an excess amount (often £500–£3,000 depending on the vehicle and company) before the waiver covers the remaining costs.
- The waiver can be voided: If you breach the rental contract (for example, by driving under the influence or speeding) the CDW may be voided entirely, leaving you liable for all damage costs.
What does CDW insurance cover?
Collision damage waiver insurance typically covers any damage to a hired vehicle while in your possession, such as getting into a collision. Theft and vandalism are often covered separately under theft protection, depending on the hire company. Waivers can cover lost income a car hire company might charge while the car is being repaired. A CDW is an extra, and comes at an additional cost.
What is not covered by a collision damage waiver?
A car rental collision damage waiver will not pay for injuries to you or other passengers or damage to your personal property. The waivers also don’t typically cover damage from negligence. This could be behaviour such as speeding or driving under the influence of alcohol.
- Personal injury to you or your passengers
- Damage to your personal belongings
- Damage to third-party property or vehicles
- The excess amount (unless you purchase excess reduction separately)
- Damage caused by negligence (speeding, drink-driving, off-road use)
How much does it cost?
When hiring a car in the UK, collision damage waiver is typically included as standard in your rental rate. However, this doesn’t mean you’re fully protected — an excess will still apply. The excess amount varies by company and vehicle type, typically ranging from £500 to £3,000. This is the amount you’d need to pay if the car is damaged before the CDW kicks in.
Let’s look at what five of the leading car rental companies offer when it comes to CDWs.
| Car rental company | Is CDW included by default? | Default excess amount | Cost to reduce excess to zero |
|---|---|---|---|
| Enterprise | Yes | £1000 for cars | N/A – but you can pay extra to reduce it, with the final excess depending on vehicle type |
| Budget | Yes | £1,000-£1,500 depending on car group | From £35 per day |
| Avis | Yes | Varies depending on vehicle and location | Varies by booking |
| Hertz | Often included in your rate | Varies depending on vehicle and location | From around £15 per day |
| Sixt | Yes | Typically £1,600-£3,000 depending on vehicle group | Varies by booking |
My top tip is to always pay the extra to reduce the excess amount. You don’t want to be liable for a huge four-figure sum of money in any accident while on holiday.”
Kirstie Pickering, KAYAK Travel Expert
Is a CDW worth it?
For most travellers, CDW is worth having because it limits your financial exposure if the hire car is damaged or stolen. However, whether you need to pay extra for it depends on your existing coverage.
CDW is usually worth buying when:
- Your personal car insurance doesn’t cover hire vehicles
- Your credit card doesn’t include rental car protection
- You’re hiring a car abroad where CDW isn’t included by default
- You want peace of mind and don’t want to worry about potential damage costs
CDW may not be necessary when:
- CDW is already included in your hire rate (common in Europe)
- Your credit card provides comprehensive rental car coverage
- You have standalone travel insurance that covers hire car damage
- Your personal auto policy extends to hire vehicles (rare, but check your policy)
Alternative options to a collision damage waiver.
If you don’t want to get a collision damage waiver, you have some alternative options. Let’s check them out.
Credit card
Many credit card companies offer hire protection for those using their cards to pay for vehicle hire. Before travelling abroad, make sure to check this with your credit card company.
Travel insurance covering car hire
When you purchase travel insurance from a third party, you can usually add on car hire collision coverage. Going this route can be cheaper than buying a CDW from a car hire company. Though be aware that if you get into an accident, you must pay the company and then get reimbursed by the third-party insurer, which can be a hassle.
Your own auto insurance
Personal auto insurance policies do not usually include hire car coverage, though there can be limited exceptions depending on your policy.
If this is the case, buying extra coverage when hiring a car in the UK would be redundant. However, your personal UK policy will not cover you when travelling abroad.
Here’s how the different options compare.
| Approximate cost | Pros | Cons | |
|---|---|---|---|
| Credit card | Free for many credit card types (but check with your provider) | No additional effort needed | Doesn’t cover personal injury, mechanical breakdowns or relevant lawsuits |
| Travel insurance | Prices vary hugely depending on car type, location and length of trip – some are from £3.49 per day | Simple to implement an add-on when searching for travel insurance | Need to select car rental as an add-on, which can be expensive depending on location and length of time |
| Personal insurance | No additional cost as only applicable to UK car hires | Easy as no additional effort needed | Not applicable to hiring cars abroad |
Conclusion
Armed with this information, I hope you can answer a car hire agent without hesitation when they ask if you need a collision damage waiver. If you have questions about other types of car and hire insurance, KAYAK’s car hire guide is here to help you.
FAQs about collision damage waivers.
If your car insurance policy does not include collision coverage, you may want to buy a CDW when hiring a car in the UK. When travelling abroad, you should make sure you understand whether CDW is already included in your hire and consider excess reduction or third-party cover if needed.
Technically, a collision damage waiver isn’t insurance. It’s a waiver that may help cover repairs if you damage a hire car.
A standard collision damage waiver is an additional coverage offered to people hiring a car that protects them from paying out of pocket if there is damage to the vehicle or theft while the car is in their possession.
‘Collision damage waiver included’ would mean a collision damage waiver is included in your car hire, though this will depend on the company and rate you book. It issometimes included as part of your car hire, and in other cases offered as an extra type of coverage you can purchase from a car hire company.
Loss damage waivers and collision damage waivers are the same thing.
