What Is CDW?
A CDW is not insurance at all; it is a waiver of the agency's insurance for those who have other collision coverage. The rental company charges you a fee in order to not charge you a high deductible amount should the car be wrecked or damaged. The insurance carrier on your personal vehicle thens become the collision insurance provider for you. Before renting a car, it is a good idea to read your coverages in your own auto insurance policy.
What Does the CDW Cover?
A collision damage waiver covers just about all of the car with some exceptions. These could be tires, windshield, and undercarriage, but these waivers can vary from company to company and may be different with more expensive types of cars. Waivers can be bought down to a low deductible amount (but not zero), but the daily cost of the rental will be high. What does all of this buy? Peace of mind for the driver.
Decline Agency CDW
Credit card companies sometimes offer CDW (collision damage waiver) if the driver/renter is willing to reserve the car in advance and use her credit card to do so. To activate the credit card's CDW, decline the rental agency's CDW. In the event the car is damaged, understand that the credit card's CDW comes into play only after your auto insurance policy has paid its limitation as detailed in the policy coverages.
CDW: What It Doesn't Cover
The collision damage waiver pertains only to damage to the rental car in question. CDW is a type of collision coverage (if buying it from the rental agency). In the event of an accident, your personal auto insurance carrier handles the liability side of claims against you. Should you be found at fault in an accident, your insurance pays for damage as well as costs to the other driver and vehicle.
Car Rental Cautions
In order to sell auto insurance coverage, a person must be licensed for property and casualty (P&C) insurance. Any unlicensed person can sell a waiver. Do not rely on advice regarding collision damage or CDW from the agency clerk. Call your own auto insurance agent. A car rental contract is a binding contract, even if the person renting the car doesn't read the fine print. Once the contract is signed, the renter of the vehicle is always responsible for any damages, no matter who is at fault. If she bumps something before driving it off the rental lot, she is liable.