Guide to Collision Damage Waiver Car Insurance
Each year the number of cars in the US increases. And with the increase of vehicles, the number of car accidents also rises. This increase also increases your risk of getting in a car accident. A study in 2019 showed that more than 6 million passenger car accidents happen in the US every year. These numbers make getting auto insurance a necessity. But with so many different vehicle insurances in the market, it can get a little confusing as to what covers what. This article will talk about collision damage waiver car insurance.
There are three main insurance policies in the market, liability insurance, collision insurance, and comprehensive insurance. Liability insurance covers the damages and injuries you do to someone else’s car/property or body in an accident. You cannot claim this policy.
Collision coverage will cover all the damages to your car in an accident that is your fault, including towing charges. This coverage policy is for the policyholder, unlike liability insurance. Comprehensive insurance covers all the damage that occurs to the car due to natural calamities or accidents that are not your fault. So another car-ramming your car, or a hurricane, earthquake, fire, theft, etc all are covered under comprehensive insurance.
So where does collision damage waiver car insurance come from? Here’s everything you need to know about it.
What is Collision Damage Waiver Car Insurance
Time and time again we need to rent a car, it could be because you’re out in some other state or on a vacation and want to explore the city. Whatever be the reason, along with the rental car, an optional coverage called Collision Damage Waiver (CDW) is offered which covers the damages in case of an accident.
Since you will be using the rental car for a few weeks at most, CDW provides limited-time collision insurance that works on a “per day” basis. Pay for the insurance for as long as you use the car and that’s it.
So the best definition of a collision damage waiver would be that it’s a collision insurance coverage that applies to rental cars and is only valid for as long as you pay for it. There are no yearly premiums or any recurring payments. Just pay as you go, no commitments.
How Much Does it Cost?
The cost of a collision damage waiver can vary not only from state to state, but also from company to company, and even from one vehicle to another. More expensive rental cars will require a higher CDW price, while cheaper cars will have lower costs.
Coming to how much collision damage waiver costs, it can start from just $30 per day and go as high as $70. Even at $30 per day, CDW can get costly if you are planning to use the rental car for more than two weeks. If you choose the cheapest plan, which costs $30, and use the car for three weeks, your wallet will be lighter by $630 in just three weeks.
If you choose the $70 per day coverage, you’re looking at an expenditure of $1470 for three weeks. These sky-high prices beg the question; Is it worth it and should you get it?
Should You Get It?
Now comes the most important question; should you get collision damage waiver coverage? Yes and no. Let us elaborate.
Some type of auto insurance is needed for you to drive any car, rental or personal. You do not need to get collision damage waiver car insurance if you already have collision insurance or something similar. However, things are rarely that simple when it comes to insurance.
Here are some things that you need to take note of before skipping collision damage waiver insurance.
Points to Consider
Make sure your insurance company offers coverage for rental cars because many don’t. And you don’t want to crash a rental car without any insurance. So get a detailed understanding of your auto insurance before deciding to ditch CDW.
You have a credit card that works in tandem with the rental car company and offers collision coverage.
Have any other third-party car insurance with a sufficient coverage limit. This is very important because the rental company can charge you for more than just the damage. The other charges include towing charges, reduction in value, management fees, and loss in revenue (while the car is being fixed). Some insurance companies might not pay for these extra charges.
If you are planning to use the rental car for more than two weeks, then get in contact with your insurance company and increase the coverage limit of your collision coverage. It is better to use your insurance coverage rather than pay hundreds of dollars.
When to Get Collision Damage Waiver
There are some impactful reasons why you should consider buying collision damage waiver car insurance from an affordable company as it increases the benefits.
The most important factor why you should not use your insurance for rental car damages is that it can increase your premium prices and insurance cost since you’ll have to file a claim.
Apart from that, you’ll have to pay the deductible amount, which on average is around $700 to $1000. This just makes paying for the CDW insurance a lot more sensible.
Even if you ignore these two points, many insurance companies might not pay for the extra charges mentioned above. For example, the rental company asks for other charges such as diminished value, towing, etc.
The issue with credit card companies’ coverage is that it can be a hassle to deal with all that, and you’ll have to pay the amount upfront and then wait for the reimbursement from the credit card company. The credit card company might also not cover the extra charges of the rental company.
So weigh in all the options and consider getting a collision damage waiver when you think it is the best option and your insurance won’t be a great choice.