Legal Definitions - collision damage waiver

A Collision Damage Waiver (CDW) is an optional service offered by car rental companies that significantly reduces or completely removes a renter's financial responsibility for damage to the rental vehicle. This protection typically covers costs associated with accidents, theft, or vandalism of the rental car. While a CDW often eliminates most of the renter's liability, a small deductible may still apply in some cases.

Beyond covering the direct repair or replacement costs of the vehicle, a CDW can also protect the renter from "loss of use" fees. These are charges the rental company might impose for the income lost while the damaged vehicle is out of service for repairs. It's important to note that a CDW usually has exclusions, meaning it may not apply if the damage occurs due to prohibited actions, such as driving under the influence or using the vehicle for illegal activities.

• Scenario: Minor Parking Lot Incident

  Imagine you've rented a car for a weekend trip. While backing out of a tight parking spot at a grocery store, you accidentally scrape the side of a pillar, causing a noticeable dent and paint damage to the rental car's rear bumper. Without a CDW, you would typically be responsible for the full cost of these repairs, which could amount to hundreds or even thousands of dollars.

  How CDW Applies: If you purchased the CDW, it would cover the repair costs for the dent and paint damage, often requiring you to pay only a small deductible, or sometimes nothing at all, depending on the specific terms. This prevents you from having to pay the full repair bill out of pocket.

• Scenario: Vehicle Vandalism

  You rent a car for a business trip and park it overnight in a city garage. The next morning, you discover that someone has smashed a window and scratched the paint on the passenger door, though nothing was stolen from inside. The rental company would hold you responsible for the damage to their vehicle.

  How CDW Applies: With a CDW in place, the cost of replacing the window and repairing the paint damage due to vandalism would be covered. This protects you from the unexpected financial burden of repairing damage that was beyond your direct control.

• Scenario: Significant Accident and Loss of Use

  While driving a rental car, you are involved in a multi-car pile-up on the highway. Although the accident was primarily caused by another driver, your rental car sustains significant front-end damage and will require extensive repairs, taking it out of service for several weeks. The rental company not only faces repair costs but also loses potential income because the car cannot be rented during this period.

  How CDW Applies: The CDW would cover the substantial repair costs for the damaged vehicle. Crucially, it would also cover the "loss of use" charges that the rental company might levy for the weeks the car is unavailable for rent, which can be a significant and often overlooked expense for renters.