The examples and perspective in this article may not represent a worldwide view of the subject. (September 2016)
Car rental companies treat the CDW as a waiver of their right to make the renter pay for damages to the car.
In many countries, it is a legal requirement to have CDW insurance included in the basic car rental rate. It covers the rented car. Some rental companies also offer liability insurance and coverage of towing charges. Terms and prices vary. Alternatives to the CDW include other car insurance policies, some coverage from credit card issuers (Visa, MasterCard, American Express etc.) and some travel insurance.
If the car damages property or injures someone, the customer or other insurance must pay for the damages (i.e., is "held liable"). US car rental companies sometimes include minimum liability insurance required by law in the basic rental charge. Hertz includes it in all states except California, but will subrogate any damages against the driver (meaning the car is insured to the state minimum but the driver will pay for all damages paid by Hertz). Avis includes it in all states except California and Texas, at least for renters who lack their own coverage. Other companies do not publicize where they include liability insurance in the basic rental charge. Some car rental companies offer more liability insurance for a fee.
Within Canada, all auto rentals are required by law to include a minimum of $200,000 in third-party liability insurance, regardless of whether the renter has their own auto insurance or not. Most rental agencies thus do not provide a third-party liability insurance option, and simply factor in the premium as part of fixed cost of rental.
Collision, theft, other damage
When a customer does not pay the car rental company to waive damage, and a rented car is stolen, or damaged by accident, vandalism, weather (hail), etc., the customer or other insurance must pay to the rental company the full cost of repair, plus administrative charges and, in some states, loss of use. From some companies, in some states and countries, there are charges for towing, storage, impound, administrative fees and diminution of value of the car (Avis, Budget, National, Thrifty). Some companies even say they alone will decide the diminution (Dollar, Hertz").
The rental company's damage waiver normally covers accidental damage and towing a damaged vehicle, as long as the renter complies with the rental contract (such as authorized drivers, locations, no racing) and with the damage waiver (such as police report). Waivers may also cover theft, vandalism, loss of use, and liability. The renter often has a choice among different coverages for different fees.
Damage Waivers can be bought from the car rental company in most countries, or through a car hire excess insurer in the UK, or through travel insurers. Coverage from the car rental company may be required if the renter lacks proof of coverage elsewhere.
Insurance or not?
CDW meets the basic definition of insurance, since it transfers some risk from the car renter to the rental company. However rental companies do not call it insurance, since it is a waiver between the renter and the company. Rental companies are not licensed or regulated as insurers. There are also no claims made. Rental companies treat CDW as a waiver of their right to make the renter pay for damage to the vehicle.
Credit card coverage of damage waiver
Cards issued in the US
Some credit card issuers (Visa, MasterCard, etc.,) offer insurance for theft or damage to rented cars. A few of the cards (noted in the table below) offer "primary" insurance, so the driver does not need to file a claim with his or her personal insurance. More cards offer "secondary insurance." This means that if the renter has personal or business vehicle insurance with appropriate coverage, then that insurance will pay first. Then the credit card issuer will pay the primary insurance's deductible and will address any large claims above the primary insurance limit.
If the renter has no other vehicle insurance for the specific claim (no insurance at all, or not in the relevant country, or no collision insurance, etc.), the credit card company (if it offers coverage) will pay the whole amount, up to its limits.
All four credit card companies listed below cover collision damage with some of their cards. Visa and some MasterCards and American Express cards also cover theft, while other MasterCards and American Express cards include theft, vandalism, hitting a deer or chipping a window (sources at bottom of table).
Other issues important to some renters are that Visa and MasterCard only cover rental contracts of 15 days or less (not even the first 15 days of longer rentals). Some American Express and MasterCards are not useful on dirt or gravel roads, since they exclude "damage sustained on any surface, other than a bound surface such as concrete or tarmac".
MasterCard and Visa in the United States say they cover "Physical damage and/or theft", but an introductory paragraph for some MasterCards and all Visa cards limits this to "collision or theft," so vandalism and hail are excluded. It may be ambiguous whether deer impacts and glass chips are covered as "collisions." MasterCards from Bank of America and MBNA generally have a simpler opening paragraph, which leaves coverage in place for any physical damage.
Even among these brands, some cards lack coverage entirely, especially debit cards and cards with low credit limits. The AmEx Platinum Cash Rebate card, for example, has no coverage. Some MasterCard "Standard" cards lack coverage, while "Premier", "Gold" and "Platinum" cards vary in their coverage. Citi® / AAdvantage®, Citi ThankYou®, Citi® Dividend or Citi CashReturns® MasterCard-branded cards are notable for providing coverage worldwide without geographic exclusions, while most other MasterCard, Visa and American Express cards exclude coverage in Ireland, Israel, Jamaica.
These schemes apply to cards issued in the US, Trinidad and Tobago, and apparently nowhere else. In addition, no credit card will cover a rental that is being billed to a third party, such as in the event that an insurance company is being directly billed for the rental.
The following table is an effort at a summary, though not guaranteed. Coverage is complex and changes periodically. Telephone staff do not know the changes. Formal insurance policies govern and are not easily available to cardholders, who are only given summaries, like the links below.
"Loss of use" and administration fees are often advertised as covered by credit cards. However, credit card companies pay these items only if the rental car company provides proof. If rental car company does not provide proof, there seems little reason for the renter to pay either.
|Primary/Secondary Coverage||Secondary (primary on United Airlines and USAA)||Secondary (primary on Chase Sapphire Preferred, Ritz Carlton, Fairmont, and Ink cards for business rentals)||None. Coverage ended 2018-02-28||Secondary, or Primary at extra cost|
|Theft||Yes, unless car keys are missing or renter has not used common diligence||Yes, unless car was running unattended||No||Yes, if locked|
|Loss of use and other administrative charges by rental company||Yes*||No||No||Varies by card*|
|Vandalism, hail, weather, falling objects||Some||No||No||Yes|
|Liability, personal injury||No||No||No||No|
|Maximum length of rental (days)||15, 31 (consecutive days) International||15 for personal rentals in renter's country, 31 elsewhere and for business rentals||None||30- or 42-day limit on all rentals by same renter with same company in 75-mile radius|
|Type of roads covered||Some cards cover All, some cover just Paved roads||All||None||Some cards cover All, some cover just Paved roads|
|Geography covered||World except Ireland, Israel, Jamaica; maybe Aust, NZ. However, certain Citi Bank cards cover worldwide without exclusions.||World except N+S Ireland, Israel (Included on Chase Sapphire and United Airlines), Jamaica||None||World except Ireland, Israel, Jamaica, Italy, Aust, NZ.|
|Drivers covered, assuming a cardholder signs contract||All drivers authorized to drive by the rental contract||All drivers authorized to drive by the rental contract||None||"Cardmember:... is named on the written agreement with the Rental Company as the person renting and taking control and possession of the Rental Auto ... remains in control and possession". The phrase "Cardmember and/or authorized driver" is used but not defined.|
|Transporting any property||Yes||No||No||No|
|Other exclusions||Trucks, large vans (e.g. over 8 people), vans used to transport cargo (anything other than people), motorcycles, luxury cars. Many other standard exclusions, such as lack of reasonable care, racing, violating law, wear & tear, war.||Same, also exclude large SUVs|
|Other aspects||Rented vehicles must have a manufacturer’s suggested retail price of $50,000 or less.||Excludes equipment not installed by manufacturer (Ex. Rental Agency GPS) Promises payment 15 days after all documents submitted.||Offer better coverage for $20–25 per rental.|
|Report to credit card company in||30 days, 45 days International||immediately, file claim in 45 days||48 hours, file claim in 60 days|
|Source, examined 7/17/2007, updated 1/25/2011, 2/25/2013, and 10/12/2015||1. mastercard.com/rentandsave||visa.com/eclaims No sources found (6/18/2008) on Visa Europe, so the program does not cover cards issued in Europe.||https://thepointsguy.com/2017/12/discover-discontinuing-benefits/||1.yourcarrentalclaim.com 2.www152.americanexpress.com/fsea/... 3.corp.americanexpress.com...|
- Bolick, Laura (10 September 2019). "Understanding Loss Damage Waiver". LowerHire.
- "Rental Terms".
- "Avis New". Archived from the original on 2012-06-16. Retrieved 2011-11-29.
- Avis offers one or two million dollars of Additional Liability Insurance (ALI) in the US.
- Hertz offers one or two million dollars of Liability Insurance Supplement (LIS) in the US
- Tchir, Jason (September 2015). "What insurance comes with rental cars in Canada?". The Globe and Mail.
- "Terms and Conditions". items 4.b and 4.c. Hertz. Archived from the original on 27 September 2016. Retrieved 24 September 2016.
- "Rental Contract Terms and Conditions". Avis Alaska. 21 April 2015. Retrieved 24 September 2016.
- "USAA - Budget Car Rental Program Frequently Asked Questions". Budget. Retrieved 24 September 2016.
- "Terms & Conditions". National Car Rental. Archived from the original on 27 September 2016. Retrieved 24 September 2016.
- "General Policies and Fee Information". Thrifty. Retrieved 24 September 2016.
- "General Policies and Fee Information". Dollar. Retrieved 24 September 2016.
- Jordan, Eric (September 26, 2014). "How to Avoid Hidden Rental Car Fees". Conde Nast Traveler. Retrieved 24 September 2016.
- Holifield, Lee, Rented car online for Heathrow
- Hertz provides insurance notes among various topics shown for each location under Reservations/Qualifications.
- Thrifty provides insurance notes under "Terms and Conditions" after a location and vehicle are selected, but before making a reservation.
- Collision Damage Waiver - moneymaxim.co.uk
- "Avoiding Unwanted CDW Charges on European Car Rentals - Gemut.com".
- Holifield, Lee, Rented car online for Heathrow International Travel News, August 2007, p.30)
- Harkin, John, Rental Cars and CDW International Travel News, December 2007
- benefit information center
- "Card Benefits - Mastercard Debit & Credit Card Rewards" (PDF).
- "Citi® Card Benefits - Credit Card Benefits for Citi Customers".
- "Credit Cards - Trinidad and Tobago". Archived from the original on 2008-03-01.
- "Card Benefits - Mastercard Debit & Credit Card Rewards".
- "Visa USA - Card Benefits".
- Auto Rental Collision Damage Waiver - Personal Auto Rental Collision Damage Waiver - Personal, Effective 4/1/11 http://usa.visa.com/personal/card-benefits/credit-card/collision-waiver.jsp
- Your Visa Card Guide to Benefit Auto Rental Collision Damage Waiver http://usa.visa.com/download/personal/cards/credit/visa_benefits_autorental_cdw.pdf
- "Discover to Discontinue Many Card Benefits in 2018". The Points Guy. Retrieved 2018-03-15.
- Discover Archived 2007-09-28 at the Wayback Machine
- "AMEX External". Archived from the original on 2016-01-31. Retrieved 2016-01-24.
- "Car Rental Loss and Damage Insurance - Terms - American Express".
- "Global Currency Solutions - American Express" (PDF). Archived from the original (PDF) on 2011-08-14. Retrieved 2011-01-25.
- "Credit Cards That Offer Primary Car Rental Coverage". 10 July 2015.
- "Chase Sapphire Preferred Credit Card Benefits - Chase.com". Archived from the original on 2016-01-31. Retrieved 2016-01-24.
- "Travel & Purchase Protection". Archived from the original on 2016-03-08. Retrieved 2016-01-24.
- primary upgrade for additional cost Archived 2011-10-10 at the Wayback Machine