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Do I Need to Buy CDW Insurance for a Rental Car?

UPDATED: March 29, 2012

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When renting a car, Avis, Hertz or other auto rental agencies often urge you to take the "Collision Damage Waiver", known as CDW. That can add as much as $15--$25 per day to your rental, a significant expense.

While most collision policies on personal autos cover damage to rental cars, the answer is not "cut-and-dried". It depends. Some factors to consider are:

(1) Where will you be driving? A sojourn to Mexico probably will not be covered under your personal policy. Or if you plan on doing four-wheel excusions to places prohibited in your rental agreement, you may nto be covered, even with CDW.

(2) What type of vehicle are you driving? If you're renting a U-Haul, pickup, motorhome or van, you're probably not covered either.

(3) Who is driving? Even if you would be covered, if the damage occurs while someone who is not a member of your immediate household is driving or someone "underage", your personal auto policy may not cover an accident. And if the driver is not listed as an authorized driver on the rental agreement, even with CDW you may be out of luck.

(4) What credit card will you be using? Each card issuer makes its own rules. Cover differs from bank to bank, by type of card (Visa, MasterCard, American Express), by class of card (green, gold, platinum), and sometimes by program.

Before driving off, to be safe, check with your insurance agent and ask about coverage specifics.

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