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A collision damage waiver is a type of optional insurance provided by rental car companies to their customers. It is a form of insurance that will ensure the driver of the rental vehicle is not liable if the car suffers a collision while he or she is driving it. Often, it is sold in addition to liability insurance, which guarantees that the driver of the rental car will not be held personally financially liable if he causes damage to someone else's person or property while driving the rental vehicle. A collision damage waiver is generally relatively expensive to purchase, depending on the type of car and the offerings of the car rental company; it is usually also unnecessary.
Many rental car companies will suggest to customers that a collision damage waiver is necessary to be fully protected from liability. Some car rental companies will even try to add the charge to the customer's rental bill without necessarily getting express consent. It is therefore important for an individual to determine whether he really needs a collision damage waiver before renting a vehicle.
For many individuals, their own car insurance will provide them with the protection they need when they are renting a car. If a person has collision coverage in his own automobile insurance policy, that collision coverage will often extend to cover a collision or damage that may occur to a rental car as well. The specific rules and policies in regards to whether collision insurance will cover a rental car or not vary depending on the insurance company, and not everyone has collision coverage on his personal auto policy; therefore, it is a good idea to contact the insurance company before depending on this coverage.
Even if an individual's own personal policy will not provide him with coverage, he still may not need to obtain a collision damage waiver. The car rental company already has insurance on all vehicles within its fleet, and in some states, the insurance follows the car. This means the particular vehicle is insured regardless of who is driving it, and the insurance company will reimburse or pay the rental car agency if the car is damaged in a collision. The rental car company may still try to hold the individual renter liable for any damage, however, so it is important to carefully read the terms of any and all rental agreements and insurance documents before making a purchase.
CDW is really a necessity. Otherwise, the rental car companies can (and often do) charge the renter's credit card for damages and loss of use and it's up to the renter to fight it out with their insurance companies for reimbursement.