A Guide to the Collision Damage Waiver (CDW) and Theft Waiver (TW)

We get a lot of enquiries about the Collision Damage Waiver (CDW) and Theft Waiver (TW) so we thought it would be great to write a post to help clear the air. This will help you know exactly where you stand with these features that are included in many of our rentals and other rentals alike. You may have seen these referred to as “Damage Liability Waiver” or “Theft Protection” – terminology can differ between country and supplier but these are the same thing.

Car Rental Insurance

Photo credit: roolrool

Collision Damage Waiver (CDW)

Basically, a Collision Damage Waiver or CDW as we’ll refer to it is an insurance against any damage that may occur to the vehicle when it’s in your possession. It’s technically not an insurance as car rental companies are not licensed or regulated as insurers but a waiver that transfers the liability of damage from you (the renter) back to the car rental supplier.

Collision Damage Waiver’s generally don’t include damage to the undercarriage, tyres, windscreen and roof. They also don’t generally cover the excess payable on damage to the vehicle. This means that if you only have basic CDW cover and you damage the rental, you’ll still have to pay the excess amount. The excess on a rental can be around $3000, so it’s no small amount of money. You can choose to purchase extra cover to reduce this cost.

Theft Waiver (TW)

Much like a CDW, a Theft Waiver (TW) waives the most part of your liability if your rental vehicle is stolen or an attempt has been made to steal the car. You’ll still pay the excess if you haven’t got cover for it and it’s important to note that if you are negligible (leave the keys in the ignition, leave the car unlocked, lose the keys) you may be liable for the full cost of the vehicle even if you have this cover.

How to avoid liability when hiring a car

There are several ways you can cover your liability to the utmost when renting a car.

Your credit card may include car rental insurance

Some major credit cards include car rental cover and excess protection in their policies if you pay for the rental using your card. In most cases you’ll still need the CDW as the cover from your card covers the excess only and still leaves a shortfall around the $300 – $500 dollar mark depending on your card/level of cover. This can be a convenient option especially if you already have one of these credit cards. It would be worth giving your credit card company a call to find out if you have this included in your policy.

Your travel insurance may include cover for rental cars

If you’re hiring whilst on holiday it is likely you’ll have travel insurance for your trip. Many travel insurance policies include cover for excess reduction up to a certain amount even reducing your liability to $0. 1Cover Travel Insurance is a popular option and we found some positive feedback on them here. You may still have to pay the excess initially to the car rental company before claiming it back from your travel insurance provider.

Purchase excess reduction from the car rental supplier

This is generally the most expensive option but probably the most convenient. Car rental companies offer additional cover for excess reduction at around $20 – $40 per day. This might be the best option for you if you would rather not deal with a third party for your cover.

Make sure you know where you stand

The best advice we can give on car rental cover is to make sure you read and understand any product disclosure statements and rental terms and conditions. If you know what you’re in for then there’s no chance of any nasty surprises if something goes wrong.