Collision Damage Waiver (CDW).  This type of insurance can also be called loss damage waiver (LDW) or physical damage waiver (PDW).  Despite most people think, collision damage waiver is really not insurance.  Instead it “waives” the right of the rental car company to come after you to recover cash if your rental car is stolen or damaged.  Mr. Thrifty’s research has shown that car rental companies typically change you $9-$19 per day for collision damager waivers.  The further bad news is that the collision damage waiver does NOT cover any damage done to someone else’s car during the rental period.  Also, the collision damage waiver becomes void if you drive in a negligent way or out of the state in which you rented the car.

Don’t despair.  You may not be stuck with an additional $20 on your rental.  If you have comprehensive and collision insurance on your car insurance at home, most likely you are covered (don’t take Mr. Thrifty’s word on this, check with you car insurance agent to make sure).   

The other good news, is that many credit cards also offer collision damage protection as a member benefit (although restrictions apply).  For example, if you put your car rental charges on your Visa or American Express, you are golden.  However, the collision damage coverage that you have is what is called “secondary coverage” meaning that the credit card company only pays for what your car insurance company doesn’t.  MasterCard and Discover cards have similar coverage as well.

Before all you scammers out there get too excited, realize that almost all of the credit card companies exclude “exotics” (cars not dancers) and many SUV’s from this coverage.  You may want to check with you credit card company as well on this one.  There are some limitations but it is worth the savings.

So, is collision damage waiver a good deal for you?  Mr. Thrifty says, “Probably not.”