Collision Damage Waiver (CDW) is a term every traveller comes across when hiring a car. It’s often offered at the rental desk as you collect your car at destination with a hard sell. So what is CDW insurance, and do I need it when hiring a car? 

Collision Damage Waiver (CDW) is an optional agreement offered by car rental companies that limits your financial responsibility if the hired car is damaged or stolen. Despite the name, it’s not actually insurance, instead, it’s a waiver where the rental company waives its right to charge you for damage beyond a certain amount​.  

In practice, purchasing CDW means that if the car hire is involved in a collision or suffers damage, you won’t have to pay the full cost of repairs. At most, you’ll pay an “excess” (deductible) up to a payable amount under the rental agreement. 

CDW is sometimes also called a Loss Damage Waiver (LDW). Generally, LDW usually implies cover for loss of the vehicle or theft in addition to collision damage, whereas CDW may refer specifically to collision damage cover. 

Is CDW mandatory or optional?  

In most cases, CDW is optional, you are not legally required to buy it. There’s no law forcing you to take CDW in the UK or most countries, only third-party liability insurance is legally mandatory for driving​. However, car hire companies can require you to have some form of damage cover, if you choose not to buy their CDW, they might insist you demonstrate other covers. This is where Gigasure’s Car Hire Excess Insurance provides the cover. 

How Does Collision Damage Waiver Work? 

When you hire a car, the rental car company will typically offer or include a Collision Damage Waiver as part of the contract. Here’s how it works in practice: 

• Choosing CDW: You can opt to purchase CDW either at the time of booking or when you pick up the car if you buy it directly from the car hire company. The agreement will add a daily fee to your rental cost in exchange for the waiver. If you buy your cover from an independent provider like Gigasure, then the policy must be bought before leaving the UK. 
• Signing the rental agreement: If CDW is included by default, the car hire rate will reflect its cost. If it’s not included, which is common in the USA, then you’ll be asked if you want to add it. Then you may have to sign the rental agreement noting whether you accepted or declined the CDW. 
• Excess Waive off: By opting for CDW, the car hire company agrees that if the car is damaged or stolen in terms of Loss Damage Waiver (LDW), they will cover the costs above a certain threshold, and you will only be responsible for the excess payable amount.  For example, if the car incurs £2,000 in damage and the excess payable amount under CDW is £500, you may have to pay £500, and the company covers the rest. If the damage is less than the excess, you will pay the actual repair cost. 
• Excess Amount: It’s important to understand that basic Collision Damage Waiver (CDW) does not remove the excess; it simply reduces your liability to that amount. Most standard CDWs come with an excess ranging from £1,000 to £1,500, depending on the type of rental vehicle. If any damage occurs, you would still be responsible for covering that cost. 

What Does a Collision Damage Waiver (CDW) Cover? 

A Collision Damage Waiver generally covers damage to the hired car from most causes, as well as the theft of the vehicle under LDW, but with some nuances. Consider CDW/LDW as protection for the rental car itself. Here’s what you can expect it to cover in most cases: 

• Accidental damage from collisions: If you get into a minor road collision or a more serious accident, CDW covers the cost of repairing collision damage to the hired car. Whether it’s a parking lot scrape or a multi-car accident, as long as it’s within the terms, the waiver means the car hire company incurs the repair costs beyond the excess. You won’t have to pay out the entire value of the car’s repairs. 
• Theft and Vandalism: If you have a Loss Damage Waiver (LDW) or a CDW paired with Theft Protection, then vehicle theft is covered as well. This means if the car is stolen or someone breaks in and steals parts of the car, you’ll be protected. Yet, you may still have to pay the excess. 
• “Loss of Use” fees: CDW typically waives loss-of-use charges, which car hire companies would otherwise pass on to you. "Loss of use" refers to the income a rental company loses while the vehicle is being repaired and unavailable for hire. Without CDW, you may be charged a daily fee for each day the car is out of service. With CDW, you generally are not charged loss-of-use fees, the waiver covers it. 
• Towing and administrative costs: If the damaged hired car needs to be towed or if the rental company charges an administrative fee for processing the accident, the CDW often covers these costs too. Essentially, the waiver means the company handles the logistics and costs of getting the car fixed and back in service.  

Please Note: If the waiver you have is pure “CDW” without theft cover, theft may not be added, but most car hires for UK customers include collision & theft cover together. Always check your policy documents and confirm if theft protection is included. 

What Collision Damage Waiver Does Not Cover 

While CDW provides important protection for your hire car, it comes with some exclusions. Understanding what isn’t covered can help you avoid unexpected costs. Here are some common exclusions of a standard Collision Damage Waiver (CDW): 

1. Third-Party Liability 

Damage caused to other vehicles, property, or injuries to other people in an accident are generally not covered by CDW​. Those are covered by separate liability insurance, which is usually included as the basic mandatory insurance in your car hire agreement.  

2. Personal Injury & Medical Costs 

Similarly, CDW doesn’t cover your injuries or your passenger’s injuries if you have an accident. Any medical expenses, ambulance costs, or compensation for injury would fall under your travel insurance policy. 

3. Personal Belongings 

If your belongings are stolen from the hired car or damaged in an incident, CDW won’t cover them. For example, if someone breaks the window and steals your suitcase or if a collision damages the laptop in the boot, the CDW won’t pay to replace your items​. 

4. Mechanical Failures & Wear and Tear 

Damage or loss caused by mechanical failure (not resulting from an accident) is typically not covered. For instance, if the car breaks down due to a maintenance issue, the rental company is responsible, not you, so CDW does not apply. However, if the damage is due to misuse, such as filling the car with the wrong fuel, it may be considered negligence and excluded from coverage. In such cases, you could still be charged, even with CDW in place. 

5. Reckless or Prohibited Use 

Perhaps the most important exclusion of CDW is that the waiver will become void if you were violating the car hire agreement.  

Common exclusions include:

• Damage caused by reckless driving or intoxication 
• Use of the car off-road or in unauthorised areas  
• Allowing an unauthorised driver (someone not listed on the car rental contract) to drive 
• Engaging in illegal activities.  

How Much Does a Collision Damage Waiver Cost? 

Cost is a big factor in the CDW decision. Collision Damage Waiver can significantly increase the price of your car hire, especially for longer trips, especially if you’re travelling abroad, in countries such as the USA, Asia or the Schengen Area countries. The fees vary by car hire company and location, but here’s a general idea to the question - How much does CDW cost? and factors that influence them: 

1. Daily fee range 

CDW typically costs around £10–£30 per day in Europe, or about $15–$35 per day in the USA for a mid-range car​. However, prices have been increasing; in some cases, CDW/LDW can run $25–$40+ per day in the USA​. 

2. Variations by car hire company 

Different rental companies price their CDW differently. A big international brand may charge £15/day for CDW on an economy car, while a local firm might charge £10/day or vice versa. It’s worth comparing rates across companies as well as confirming the level of cover they provide and then making an informed decision and buying the cover that best suits your needs and budget. 

3. Location and region 

In Europe, because basic CDW is usually included, what you pay extra for is the excess reduction to lower your deductible. For example, a UK resident hiring a car in Spain might find the car hire cover already comes with CDW (with €1,000 excess), but the rental company offers an additional cover for €10–€20/day to bring the excess to zero. 

4. Vehicle type 

The class of car you rent affects CDW price. An economy or compact car will have a lower CDW fee than an SUV or a performance car. Since the potential damage cost is higher for a more expensive car, the waiver fee is higher to match. For instance, CDW might be £10/day for a small car but £25/day for a premium car. 

5. Car hire duration 

CDW is typically charged per day, meaning the longer you hire the car, the more the cost adds up. Some car hire companies may offer a discounted weekly rate, but this isn’t always guaranteed. As a result, CDW can become very expensive for longer trips. For example, at £20 per day, a two-week (14-day) rental would cost £280 just for the waiver. Opting for an independent Car Hire Excess Insurance policy could be a more cost-effective alternative, helping you save money while staying protected.  

Should You Get a Collision Damage Waiver? 

Deciding whether to purchase CDW from the car hire company or an independent provider depends on your specific needs and any existing coverage you may already have. To help you make the right choice, here’s a breakdown of when Collision Damage Waiver (CDW) can be beneficial and when it might not be necessary: 

When CDW is worth considering? 

If you don’t have any personal car insurance that extends to rentals and no credit card cover, buying CDW might be the only way to protect yourself from a huge financial risk.  

For a short rental or when driving in areas with higher accident or theft rates, you might just take CDW for simplicity. Also, if you know you’ll be driving in challenging conditions, maybe through busy cities, mountainous roads, etc., having the waiver can be helpful. 

If you’re travelling to places anywhere outside Europe/North America, local laws or lack of reciprocity can make your home policies ineffective. In such cases, CDW or car hire excess insurance is strongly recommended.  

When CDW might be unnecessary? 

If you already have a car hire excess insurance policy that covers rental cars, you may be able to decline CDW, helping you save money. However, there are restrictions to keep in mind. You must adhere to the policy's terms, such as listing yourself as the driver, staying within the allowed car hire period, and ensuring the vehicle type and country are covered. 

It is recommended to take out Car Hire Excess Insurance from an independent provider to ensure you have the right level of cover. With a provider like Gigasure, you can tailor your policy to suit your specific needs and budget, giving you greater flexibility and protection. While some credit cards offer excess cover, relying on them may involve complex claims processes and potential limitations. Instead of paying the car hire company for CDW or excess reduction each time, an independent policy can provide more comprehensive and cost-effective protection for your trip.  

When Does Gigasure's Cover Include CDW? 

One of the advantages of Gigasure’s Car Hire Excess Insurance is that it can include Collision Damage Waiver cover for certain regions. If you’ve purchased a Gigasure policy, you may already have CDW protection and you don’t need to buy any additional CDW from the rental company. 

Gigasure offers different plans such as Europe, Worldwide, USA, Canada & Asia policies. For rentals in the USA, Canada, the Caribbean, Central and South America, and other regions worldwide, Gigasure includes CDW/LDW as standard in the excess insurance policies​. With this cover, you can confidently decline the rental company’s CDW/LDW at the counter. Additionally, Gigasure’s Car Hire Excess Insurance is typically far more affordable and provides CDW protection up to £75,000. 

In Europe and other regions where car hires include CDW by law, the Gigasure policy works a bit differently: since CDW is already included with an excess, Gigasure acts to cover that excess amount up to £10,000. 

Please make sure to review your policy documents carefully and double-check that your coverage includes everything you need before completing your purchase.

Additional benefits Gigasure provides beyond CDW 

Gigasure’s Car Hire Excess Insurance doesn’t just mirror CDW; it often goes further: 

• It covers the common exclusions that basic CDW misses out on. For example, Gigasure covers damage to tyres, wheels, windscreen, roof, undercarriage, mirrors, etc. All the bits that cover from car hire companies CDWs frequently exclude​. 
• It covers the excess you would have to pay. Even if you have CDW (from the car hire company or Gigasure’s own CDW in the USA), you may still face an excess charge. Gigasure’s policy reimburses you up to an excess limit of £10,000, meaning you can effectively achieve a zero excess outcome without purchasing the car hire company’s expensive zero-deductible upgrade. 
• It includes things like hire car key replacement, where Gigasure covers up to £500 for lost/stolen keys. 
• There’s no need to rely on credit card cover or worry about credit card exclusions when you have Gigasure. It’s a primary cover tailored for hire cars. 

How Gigasure’s Car Hire Excess Insurance Compares 

Let’s put it all together and see how Gigasure’s Car Hire Insurance Excess stacks up against the traditional route of buying a Collision Damage Waiver from the car hire companies: 

1. Cost savings 

Rental CDW can cost anywhere from £10 to £25+ per day, which over a one or two week holiday can be a few hundred pounds. Comparatively, Gigasure’s excess insurance is typically less, often just a few pounds. 

2. Scope of the cover and peace of mind 

Gigasure’s Car Hire Excess Insurance provides broader cover than a standard CDW. As highlighted, it covers things like tyres, wheels, glass, undercarriage, and roof damage which standard CDW often excludes. It also includes theft (as part of CDW/LDW) and vandalism. Essentially, Gigasure’s policy is designed to cover almost any damage to the rental vehicle, not just the easy parts.  

Gigasure also covers the excess charges up to a high limit, so whether your rental had an excess or not, you won’t be left paying out-of-pocket beyond what you paid for the policy.  

3. Convenience and claims 

One concern people have with third-party insurance is the claims process compared to the rental CDW. Gigasure has an easier and seamless, digital-first approach, where you can manage your policy and submit claim through the Gigasure app​. While with CDW you avoid claims entirely, remember if damage happens, you’d still have to fill out incident reports, etc., so either way, there’s some admin. 

Your Frequent Questions Answered

1. Does CDW cover all damages to the hired car? 

Not necessarily. Standard CDW covers most accidental damage and theft of the rhired vehicle, but it often excludes certain parts and situations. Commonly excluded are windscreens, tyres, the undercarriage, roof, and interior damage. Also, CDW won’t cover damage if you were breaking the car hire agreement, such as rash driving, off-road, etc. Breaking the terms and conditions of the car rental agreement could void the waiver​. If you want a reliable cover for the car, including those excluded parts, consider Gigasure’s car hire excess insurance, which covers even the typically excluded damages. 

2. Can I decline CDW and still be covered? 

Yes, but only if you have alternative cover in place. You can decline the car hire company’s CDW if you have a third-party car hire excess insurance. Otherwise, you will be exposed and liable for any damage costs. 

3. What happens if I damage the hired car and I don’t have CDW or any cover? 

If you choose not to take CDW, and the rental car gets damaged or stolen, you are typically liable for the entire cost of the damage or loss. The car hire company will repair or replace the vehicle and then charge you for the costs. They will likely charge your credit card on file up to the car’s value, which can be financially devastating. But if you had no cover, then you might have to pay the bill.  

 

Protect Your Journey with Gigasure 

Collision Damage Waiver (CDW) is a key component of car hire insurance that protects you from massive bills if your hired car is damaged or stolen. For UK travellers, understanding CDW is essential, it’s often included with an excess in Europe, and always subject to terms and exclusions. 

With Gigasure, you can travel knowing you’re protected without paying so much for each rental. The cover is designed to fill the gaps left by car hire company CDWs and even includes CDW itself where needed, giving you a safety net. 

By planning ahead, you can avoid unnecessary charges and car rental pressure. Just fill out a quick form on Gigasure’s website to get a personalised quote for your car hire excess insurance. Also, Gigasure offers Van Hire Excess Insurance if you’re hiring a van. Don’t hesitate to contact us and learn more or if you have any questions about Travel Insurance or Car Hire Excess Insurance.