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What is the waiver they offer at the rental counter?

Short answer

Not insurance, despite how it is sold. A collision damage waiver is the rental company agreeing not to bill you for damage to its own car — which leaves the other driver's car, and the people in it, to something else entirely.

Signs for rental car companies at an airport

A waiver is not a policy

New York's financial regulator sets this out for consumers: the collision damage waiver sold at the counter, as CDW or LDW, is not an insurance product. It is a term in the rental contract under which the company gives up its right to charge you for damage to the vehicle you rented.

The distinction matters because of what it leaves out. A waiver on the car you are driving says nothing about the car you hit or the people in it. Those are liability claims, and they are the expensive ones.

So there are two separate questions at the counter

The first is who pays for the rental car if it is damaged — the waiver, your own motor policy if it reaches this country, or a benefit attached to the card you are paying with. Any of the three can cover it, which is why buying the waiver on top of a card benefit is the commonest way a visitor pays twice for the same thing.

The second is who pays for everyone else. Liability requirements are set by each state rather than nationally, so how much of it comes with the rental depends on where you are renting. That is a question to put to the counter directly rather than to assume either way.

What to settle before you fly

Ask your card issuer, in writing, whether its rental benefit applies in the United States, whether it pays first or only after your own insurer, and what it excludes — large vehicles and long rentals are common exclusions.

Then at the counter you can decline or accept the waiver knowing which of the two questions you have already answered. The one thing not to do is treat the waiver as answering both.

Good to know

  • A collision damage waiver is not insurance — it waives the company's right to bill you
  • It covers the rental car only, not the other car or any injuries
  • A card rental benefit may already cover the car — check before buying the waiver
  • Liability requirements are set state by state; ask at the counter

Sources: New York State Department of Financial Services — Collision damage waivers and rental vehicle coverage · Updated

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