CDW vs LDW: What's the Difference in Car Rentals?

Understanding car rental insurance can feel complex. In this guide, we'll break down Collision Damage Waivers (CDWs) and Loss Damage Waivers (LDWs) to help you understand the differences and which is right for your car rental journey.

Key takeaways

• A Collision Damage Waiver provides basic coverage for damage to your rental vehicle.
• A Loss Damage Waiver offers coverage very similar to a CDW and usually adds coverage for theft and vandalism.
• CDWs and LDWs are generally available to purchase from your car rental company. Rental companies will often refuse to hire a car to you if you do not have one of these policies or equivalent cover from another source.
• Generally, these policies can have significant exclusions and high out-of-pocket costs for you to cover. You can get more comprehensive cover through more expensive policies known as Super Collision Damage Waivers and Super Loss Damage Waivers, or external providers like RentalCover.

What is a Collision Damage Waiver (CDW)?

A Collision Damage Waiver (CDW) can offer important protection when driving a rental vehicle. However, it's not strictly "insurance". It's actually a document transferring the liability for damage to a rental vehicle from you to your rental company.

In Canada and the United States, CDWs are generally not included in the price of your rental vehicle. Your rental company may refuse to rent a vehicle to you if you do not have a CDW, or equivalent cover.

These basic rental company policies usually come with high deductibles you must pay in the event of a claim.

Typically, CDWs from your rental company will cover the following:

• Single vehicle accidents.
• Optional extras such as scratches and bumps on the main body of a vehicle.

However, you can get superior coverage from other providers. RentalCover includes the following cover in our policies:

• Single & multi-vehicle accidents.
• Full fire, theft and vandalism cover.
• Towing.
• Lockout.
• Car key cover.
• Windscreens.
• Headlights.
• Tires.
• Underbody damages.
• Unlimited additional drivers.

Super Collision Damage Waivers

Your rental company may offer more comprehensive coverage with no deductible through more expensive policies called Super Collision Damage Waivers. However, these policies may still incur out-of-pocket costs in the event of an incident, including towing and loss-of-use fees.

RentalCover's policies are 50% cheaper than this level of cover offered by rental companies,† and there's nothing for you to pay when you make a claim.

What is a Loss Damage Waiver (LDW)?

"Damage" isn't the only way you could be held responsible for the loss of a rental vehicle. Some CDW-like policies include cover for damage as well as theft.

These policies are often known as Loss Damage Waivers (LDW). However, in some cases a policy known as a "CDW" may also include this cover.

LDWs generally offer cover very similar to CDWs, with the added benefit of theft protection. They can also include vandalism, which is generally excluded from a rental company's CDW.

LDWs aren't the only way to get cover for vehicle theft. At RentalCover, we also offer this cover as part of our streamlined policy structure.

Super Loss Damage Waivers

Your rental company may also offer a Super Loss Damage Waiver. SLDWs offer more comprehensive coverage than a standard LDW, including vehicle theft.

These policies generally have no deductible, but, like SCDWs, you can still face out-of-pocket costs, including towing and loss-of-use fees.

What's the difference between a CDW and an LDW?

Here's a general overview to help you understand the difference between CDWs and LDWs offered by rental companies. Refer to your policy statements and rental agreement to understand exactly how your cover works.

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Want more comprehensive cover that's 50% cheaper?† Get an instant quote from RentalCover today.

CDW vs LDW: Which do you need?

Overall, the more comprehensive coverage of an LDW provides more peace of mind when traveling. If you're traveling to an area with a higher risk of vehicle theft, having this protection can be especially valuable.

It's also important to remember that when it comes to being protected for your rental vehicle, you aren't just limited to these options. Make sure to consider alternatives, including cover you may receive from your credit card, or third party providers like RentalCover. You may also have some cover offered by your personal car insurance.

Rental car companies often rely on the fact that customers don't fully consider their options ahead of time. This can lead to subpar coverage. Providers like RentalCover offer comprehensive protection for rental car damage, theft, vandalism and much more so you can travel with peace of mind.

Are CDWs or LDWs included in rental vehicle costs?

In Canada and the United States, CDWs are almost never automatically included in the base price of your rental vehicle. If you want one of these policies, you'll need to make a separate purchase from your rental agency.

Keep in mind that many car rental companies require you to have a CDW/LDW, or equivalent coverage from a source like your credit card or RentalCover. If you don't, they may refuse to rent a vehicle to you.

Get more comprehensive protection with RentalCover

For higher-quality coverage that's also 50% cheaper than the rental companies†, choose RentalCover. Travel with peace of mind, knowing you have protection for damage, theft, vandalism and more. Plus, there's nothing for you to pay in the event of a claim.

Get your instant quote today, and enjoy your next holiday without stressing about financial hardship if things go wrong.

Frequently asked questions

Do I need a CDW if I have an LDW?

Typically, an LDW will include all of the cover you'd find in a CDW. Rental companies also generally don't offer two distinct policies in these categories, meaning you won't have the option to pick between them.

Are CDWs and LDWs really insurance?

Technically, CDWs and LDWs are not insurance. They're actually waivers that transfer the liability for damage or loss of a rental vehicle from the driver to the rental company. In terms of their practical function and cost structure, they are very similar to insurance.

What exclusions should I check for in a CDW or LDW?

Rental company CDWs and LDWs often have extensive exclusions. This can include:

• Multi-vehicle accidents
• Towing.
• Lockout.
• Keys.
• Windscreens.
• Headlights.
• Tires.
• Underbody damages.

Make sure you understand the exclusions in a rental company's CDW or LDW before picking up your vehicle, and consider purchasing a more comprehensive policy.

Can I decline a CDW or LDW?

Yes, you can absolutely decline CDW or LDW cover from your rental company. However, if you do so, rental companies will often insist that you have equivalent cover from another source.

If you have a RentalCover Full Cover policy, you can confidently decline your rental company's CDW. The cover we provide means that your rental company's policy is unnecessary.

Can I still be charged if I have a CDW or LDW?

Yes, you can still face out-of-pocket expenses after making a claim, even if you have a CDW or LDW. Costs you could be responsible for include:

• Excluded items: If loss or damage occurs outside of the coverage of your policy, you can be held responsible for the resulting costs. This could affect you if certain parts of your vehicle are damaged or if types of loss occur outside of your coverage scope.
• Additional costs: Costs like towing and loss-of-use fees are often not covered by a rental company's CDW or LDW.
• Deductible: Your policy includes a deductible amount you must pay in the event of a claim. Deductibles for basic rental company CDWs and LDWs can be very high, leaving you with a significant amount to pay out of pocket.

What's the difference between liability insurance and Collision Damage Waivers?

In the context of rental car insurance, liability insurance refers to cover for third party charges you may face for injuries to people or property damage while driving a rental vehicle. By contrast, a Collision Damage Waiver provides cover for the rental vehicle you are driving.

It does this by transferring liability to the rental company.