A collision damage waiver (CDW) is an agreement by which a second or third party promises to cover the costs of damages or loss to a rental vehicle on behalf of the renter. A collision damage waiver is not an insurance policy, but a simple agreement between a renter and a third-party – typically the owner of the rented vehicle.
Rental car companies commonly offer CDW agreements to renters as an optional extra in exchange for fees. In this case the rental car company or a third-party insurance provider covers the costs of damage to or loss of a rental vehicle which would normally have to be covered by the renter. Collision damage waivers also come as a complimentary benefit with some Swiss credit cards.
In jurisdictions in which it is customary for rental vehicles to be insured by collision car insurance and comprehensive car insurance, the collision damage waiver agreement typically only covers the deductible which the renter must pay out of their own pocket, with the bulk of costs being covered by the vehicle’s insurance. The CDW benefits which come with many Swiss credit cards typically cover collision and comprehensive car insurance deductibles.
The terms collision damage waiver and CDW are often used interchangeably with the terms loss damage waiver and LDW.
In jurisdictions in which third-party liability car insurance is not compulsory (such as South Africa and New Zealand), the CDW or LDW agreements offered by rental car companies may include a waiver of third-party liability costs in addition to the costs of damage to the rental vehicle. This is also the case in jursidiction where drivers of rental cars are not covered by the owner's liability insurance policy.
In Switzerland, the terms loss damage waiver and LDW are typically used to denote actual full casco car insurance coverage, rather than a simple waiver agreement, while the terms collision damage waiver and CDW typically denote a collision damage waiver in the standard use of the term.
Some Swiss car insurance policies provide coverage for vehicles rented by the policyholder. Depending on the policy, this may include third-party liability coverage, collision insurance and comprehensive insurance. Vehicles renters who hold Swiss car insurance policies should review the terms and conditions of their policy to determine whether their policy includes rental car insurance coverage.