Damage waiver or collision damage waiver (CDW) is additional cover that is offered when you rent a car. Such type of cover can be expensive in some countries and can add twenty to 50 percent more to the rent of the car. However, people opt for such cover in some circumstances such as when using the vehicle on long vacations or when using an expensive vehicle.

• Collision cover is offered in another form which is called collision cover top up or super collision cover. These are really expensive compared to normal collision damage waivers and are only advisable if you are renting a very expensive vehicle. Buying such cover from a car rental company is not advisable and you may get such cover from your own car insurer instead of the rental company.
• Such cover is also given by credit card companies including Visa, MasterCard, Amex, and Discover. This is another option of opting for such cover; however some types of damage can be excluded from credit card coverage. For instance damage due to war, terrorist activity, lack of reasonable care, violating the law, and racing are usually excluded by all credit card companies.
• The major distinction among the four credit card companies listed above is that MasterCard and Amex cover collisions, theft, vandalism and weather; Visa covers collisions and theft, but excludes vandalism and weather; while Discover covers merely collisions. MasterCard also gives this coverage only to specific cards: “Standard” cards do not provide this advantage, only “Gold” or “Platinum” cards.
• In case of credit card companies the rental period can range anywhere from 15 days to 48 days. It completely depends on the credit card company’s terms and conditions. Moreover the cover that is provided only protects the driver in some cases and some credit card companies cover the driver as well as other passengers. Most cards offer cover against vandalism, theft, damage due to falling objects, and weather.
• Another point to be considered here is that some car rental companies may include the waiver automatically in their contract. Many people are not aware of this fact and are kept in the dark by the rental agency. This means that if you are already insured by the rental company with a built-in clause then your credit card company may fail to reimburse you in any way as it usually voids the contract with the credit card issuer.
• Many people have reported problems with credit card companies denying them such cover because of the location or country where the car was rented. It is advisable to call and ask the credit card company about the “fine print” issues that may burn a hole in your pocket. The main reason for getting CDW is that for a personal car, a dent on scratch is a small thing but for a rental company, it may require professional repair which may be costly.
• The bottom line for such types of insurance is that it is absolutely necessary when you rent a car. Furthermore it is advisable to clarify all the terms and conditions from the insurance provider (or credit card /rental agency) before opting for CDW. The terms and conditions can be complicated and vary according to the company and the location where the car was rented.

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Collision coverage is an optional part of the car insurance policy that covers the driver or policyholder in case of a collision. Basically this type of coverage pays for the damage caused to a car in case of a collision. However it does not pay for any medical expenses incurred to any party that was involved in the accident.

• The viability of such cover totally depends on the type of car or vehicle that is being used. Costly vehicles may definitely require such cover since the amount of premiums put together would usually be less than the expenses incurred in such cases. On the other hand older vehicles for which the cost of repair exceeds the worth of the vehicle may not require collision cover.
• Such cover is also offered by credit card companies when you rent a car; however loss due to vandalism and theft are usually not covered. The exceptions being MasterCard and Amex which cover damage due to theft, vandalism and loss of use whereas Visa omits vandalism, theft and loss of use from the contract.
• Collision cover has a deductible which the car owner or policyholder has to shell out before the insurance company pays for anything. The amount of deductible is inversely proportional to the amount of premiums paid. This means that if you opt for a big deductible then the amount of premiums will drop.
• Another important point to consider is that the length of the policy is directly proportional to its cost. This means that if you do not meet with an accident you will keep paying the premiums while the cost of the vehicle devalues. Therefore it is important to drop or modify the cover at the breakeven point. The breakeven point is where the cost of premiums exceeds the cost of the car and the maximum possible amount spent on its repair (if any).
• Collision coverage can be a RCV (Replacement Cash Value) or an ACV (Actual Cash Value). Replacement cash value cover totally replaces the vehicle whereas actual cash value will pay for the repairs to the vehicle to restore it back to the condition prior to the accident. An expensive vehicle usually needs a RCV whereas for an old car an ACV would be suitable.
• In some cases you will be required to carry collision coverage such as when the vehicle is financed, leased or rented. This is because the bank or the financer doesn’t want to incur a loss due to your negligence or accident. This means that if you take out a car loan then the loan provider would ask you to purchase collision cover before forwarding any funds. Another situation where collision cover will automatically be included is when you use your company vehicle.
• The need for such cover only arises when your car is new or expensive and the repairs would cost more than you can afford. In old cars where the damage is not very costly or is more than the price of the vehicle itself such type of cover is not required. However it is advisable to make a rough estimate of how much it will cost you in case of an accident even if your vehicle is comparatively old.

If you have any additional points to share please feel free to leave a comment.