Rental Car Insurance — CDW and Beyond

Rental Car Insurance — CDW and Beyond

Photo by Usman Malik on Unsplash

From: Ernie Adventitious

Subject: Rental Car Insurance — CDW and beyond

Date: August 24, 2025

To: Richard Praefectus Classis

Rick,

Yes, I understand your struggle with the decision about accepting the Collision Damage Waiver when renting a car.

For years and years, I thought “CDW is a waste of money, my auto insurance covers me”. But standing at the car rental counter on my last trip and hearing the usual question, “Do you want CDW?”, and not knowing the right answer caused my to pause; I needed to figure this out.

So I did some research. Actually, I did a lot of research: reading contracts, poring over insurance policies, googling, and talking to my insurance company. But a simple answer isn’t to be found. Its complicated.

At least now I have a better idea about what insurance is all about and the questions I will be asking next time I plan on renting a car.

Note: I do not claim nor should you, the reader, assume that my recounted experience is typical or representative for anyone else. Also, do not rely on its accuracy or completeness, as there may be errors or omissions. This is not legal advice; consult a qualified attorney for legal matters.

I will have the right attitude about insurance.

Insurance does not provide “peace of mind”, as a couple of insurance salespersons have said to me. If I have an accident in a rental car, it is still a shit-show. I have to deal with the consequences: injuries to myself or loved ones, injuring someone else, adjusting travel itineraries, and dealing with related emotions. Having insurance, while protecting me financially, just adds more stress — collecting information required, submitting claims, and then negotiating with multiple insurance companies in order to get reimbursed.

For me, the purpose of insurance is simply to reduce the possibility of having to pay out large sums of money if an accident occurs — it does not provide peace of mind.

It’s about more than CDW

CDW stands for Collision Damage Waiver. If I have it the car rental company says they waive all claims against me for repair or replacement of the rental car, including administrative costs like “loss of use” and “reduced value”. But CDW comes with exceptions:

• Some CDW agreements would not protect me if my rental car is stolen. Coverage that also covers stolen vehicles is often called “LDW” — but sometimes it’s called “CDW”. What??
• CDW sometimes has a deductible. According to the internet, this could be as much as $1,000. And I have found that rental companies are remarkably opaque in disclosing the specifics of their CDW.
• CDW covers the rental car only! It does not include any liability protection for me. Some would say this puts me in danger of paying out a lot of money if I am at fault for an accident.
• CDW does not cover medical costs for me or my passengers, roadside assistance, or my personal items I have in the car.
• CDW is sometimes not available for rentals periods of over 30 days.

My personal insurance policy is key

The specifics of my personal auto policy, including coverage for rental cars, depends on the terms of my insurance, the state/country where the car is rented, the state/country where an accident occurs, case law, and other factors.

So I need to call and talk to my auto insurance company every time I rent a car to find out what coverage I have. Renting a similar auto at the same location doesn’t mean a call isn’t needed, because coverages can change with time.

During that conversation, I need to mention the rental company I want to use. My insurance company has negotiated agreements with some of the major rental companies and those agreements include waivers by the rental company of some administrative costs. Renting through my auto insurer’s web site gets me those considerations.

I need to know what other insurance I have.

My credit card company has some provision for rental car insurance; essentially paying for my auto insurance deductible (with some exceptions). A relatively small amount, but still helpful.

When I travel internationally, I always buy travel insurance, mostly for the medical coverage. A quick check of that policy will let me know if it says anything about rental cars.

I need to know the exceptions contained in all the policies.

All insurance has exceptions to coverage, and rental car insurance is no exception (is that a double negative?). There are usually provisions that void a policy, things like speeding, “not keeping the car secure”, driving under the influence, and racing. I can control most of these by not being a dummy, but one thing I need to watch out for is the exception if renting an “exotic or luxury” car. Beware the free upgrade — it might void the insurance!

Also, I noticed that the insurance that comes with my credit card is void if I accept CDW! What??

The rules change if I am in a foreign country.

I have never rented a car overseas, preferring to use public transportation when I travel. If I ever consider renting a car outside of the U.S., though, I will have to deal with different rules.

Some auto insurance (mine included) does not extend overseas (Canada and Mexico are covered, with some changes). I need to ask my auto insurance representative about coverage in the country(s) where I’ll be renting a car.

CDW might be worthwhile if renting in a foreign country where my personal car insurance does not provide coverage. Given the limitations of CDW, though, I will probably consider an auto rental insurance policy offered by an online travel insurance company. It might even be cheaper than CDW!

Unfortunately, the online rental policy I found doesn’t have any liability coverage. This might be okay, though, because the internet says liability coverage is automatically included in car rental contracts in some countries. If this is not the case where I rent the car, I’m probably stuck with the liability coverage offered by the car rental company. I don’t know what I will do if I think these coverages are not adequate.

So, Rick, sorry. I don’t think I’ve found a simple way to decide if CDW is needed when you rent a car. Its complicated.