Short answer
A collision damage waiver (CDW) — usually sold in the US as a loss damage waiver (LDW) that also covers theft — is an optional agreement where the rental company waives its right to charge you for damage to or loss of the car. It doesn't cover liability to others or injuries, and it's void if you break the rental terms. You may not need it if your auto policy or credit card already covers the car.
CDW is the most-sold extra at the rental counter and the least understood. Here's what you're actually paying for.
CDW vs. LDW
- CDW (collision damage waiver) covers damage to the rental car from a collision.
- LDW (loss damage waiver) covers collision damage plus theft and loss of the car. In the US, most major companies sell LDW, and the terms are often used interchangeably.
Both are waivers, not insurance policies: the company agrees not to hold you responsible, rather than an insurer paying a claim. Some states regulate how they're sold and priced.
What a waiver usually covers
- Damage to the rental car
- Theft of the car (LDW)
- Often, the company's extra charges after damage, such as loss of use while the car is repaired and administrative fees
What it doesn't cover
- Damage or injury you cause to other people or property — that's liability. See supplemental liability in car rental insurance explained.
- Your own injuries or belongings
- Damage caused while breaking the rental terms: an unauthorized driver, driving under the influence, off-road driving, or using the car for hire
- At some companies, specific parts such as tires, glass, undercarriage or keys — check the terms
What happens if you decline it
If the car is damaged or stolen and you declined the waiver, the company will bill you. Charges can include repair costs, loss of use, diminished value and admin fees. Your own coverage then needs to pay — which is why it's worth knowing in advance whether your auto policy or card covers those extras.
When CDW/LDW makes sense
- You don't have a personal auto policy with collision coverage.
- Your credit card doesn't cover the car type, the rental length or the country.
- You're renting a high-value car your other coverage excludes — common with luxury rentals.
- You want to avoid any claim on your own policy.
When you might skip it
If your auto policy or credit card already covers damage to the rental — and you've checked the exclusions — the waiver can be redundant. See do you need insurance to rent a car to work through your options, then compare cheap car rentals.
FAQ
Frequently asked questions
Everything you need to know about renting a car