What is CDW (Collision Damage Waiver)?

By , Last Updated: 17 July 2024

Hiring a car should be an exciting time, as it offers you the freedom and flexibility to explore new destinations at your own pace. However, sometimes the process can be a little confusing, especially when you are faced with abbreviations and acronyms that can have a big impact on your rental agreement.

It is important that you fully understand your agreement, as this can help you save money, feel confident that you are compliant, and avoid any problems at the car hire desk when returning your car. To help avoid any confusion and make the process a little easier, we are taking a look at two of the most popular terms used within car rental agreements and what they actually mean.

We have also made a handy video that summarises these often-confusing terms:




CDW (Collision Damage Waiver)

A collision damage waiver (CDW), also known as a loss damage waiver (LDW), is a contractual agreement between the customer and rental company to waive the cost of significant damage caused to a hire car beyond the excess limit.

It is usually included in UK and European car rental agreements, along with theft and third-party liability as standard, however we always advise you read your rental agreement fully to make sure you understand what you're liable for. If you are unsure, or do not understand what is outlined, do not be afraid to ask questions or ask for clarification at the car hire desk.

With a CDW, if there is any damage caused to your vehicle you will still need to pay up to the excess limit. unless you protect that excess by paying (an expensive) daily fee with the hire company, or using an excess reimbursement insurance product like ours.


Collision Damage Waivers in the UK & Europe

Most car hire companies in the UK and across Europe include a basic level of CDW/LDW cover as standard with an Excess (which is normally between £1000 - £3000). If they don’t, they’ll likely expect you to purchase this from them at the time of hire for an additional premium. It’s up to you whether you choose to do this or not, but bear in mind it may be a legal requirement in the country you’re visiting.

They will also offer you an optional excess waiver cover, which for a cost normally around £10 - £30 per day which will then give you cover for the full value of the vehicle, including the excess you'd normally have to pay in the event of damage.

You can of course, refuse the additional excess waiver cover and instead purchase car hire excess insurance from ReduceMyExcess for a significant cost saving.

Our UK and Europe coverage offers a standard cover limit of £10,000, with cover extending to:

  • Tyres, Windscreen, and Undercarriage Cover
  • Family Cover
  • Additional Drivers
  • Personal Possessions
  • Misfuelling
  • Towing
  • Key Cover

    • ...with prices starting from as little as £2.57 a day for single trips!


    Collision Damage Waivers in the US & Canada

    If you are visiting the US or Canada (and some other countries), you will find that a lot of rental companies do not include collision waiver damage as part of their agreements, but you can purchase it as an extra. However, the waiver that is offered is usually more expensive and less comprehensive. ReduceMyExcess offers CDW cover, but only for those travelling in the USA or Canada. To benefit from this, you will need to refuse the rental company's CDW insurance and opt for our Worldwide+ annual cover, which will protect you up to $50,000.


    What is SLI (Supplemental Liability Insurance)?

    SLI (Supplemental Liability Insurance) is equivalent to third party coverage. This additional cover means that if you are involved in an accident, you are insured against property damage and personal injury up to a certain limit. ReduceMyExcess does not sell SLI, and any costs incurred under SLI will not be covered by your policy with us. European rental agreements should always include SLI, but it is always important to double check.


    Final thoughts

    ReduceMyExcess’ policies are designed to be a more valuable and comprehensive alternative to the excess waivers offered by car rental companies. By familiarising yourself with these common terms and their meanings, you can make informed decisions, know your coverage options, and focus on enjoying a stress-free holiday, knowing you are fully covered.

    Remember to always review rental agreements with care, ask questions, and know that what is offered at the car hire desk is not always the only option.