What Is a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)?

A collision damage waiver (CDW) and loss damage waiver (LDW) are contractual products that a car rental company offers at the counter. Despite the name and the way they are marketed, neither one is insurance. Both are agreements by the rental company to waive its right to hold you financially responsible for physical damage to or theft of the rental vehicle – with significant conditions attached.

Why the “waiver” distinction matters

Insurance is a regulated financial product governed by state insurance law. A CDW/LDW is a contractual waiver written into the rental agreement. This distinction has practical consequences: the terms are set entirely by the rental company, not by state insurance regulators, and the conditions for voiding the waiver are whatever the contract says.

Rental companies typically price CDW at $10-$30 per day for domestic rentals. Accepting the CDW removes the risk that the rental company will charge you for damage – but only if the conditions of the waiver are met.

When is a CDW or LDW voided?

The rental agreement defines the conditions that void the waiver and restore full financial liability to the renter. Common voiding conditions:

An unauthorized driver was operating the vehicle at the time of loss – anyone not listed as an authorized driver in the rental agreement
The vehicle was used off-road or on roads for which it was not designed
The driver was intoxicated or impaired at the time of the accident
The vehicle was used in a race or speed contest
The loss occurred while the vehicle was being used for commercial purposes not disclosed at rental
The driver violated a law that contributed to the loss

When the waiver is voided, the renter is responsible for the full amount of loss: repair or replacement cost, loss of use while the vehicle is out of service, administrative fees, and potentially diminished value. These charges are not capped by the waiver – voiding it removes all protection. For example, if an unauthorized driver was at the wheel during a collision, the rental company could bill the named renter for the full repair cost, daily loss of use fees while the car is in the shop, and an administrative charge on top.

What does CDW not cover?

Even when the waiver is valid and not voided, CDW/LDW only covers physical damage to or theft of the rental vehicle. It does not cover:

Your personal property inside the vehicle
Bodily injury liability to other people in an accident you cause
Property damage liability to other vehicles or objects you hit
Injury to you or your passengers

A renter who accepts CDW but declines all other coverage at the counter has no liability coverage from the rental company for damage they cause to third parties. For example, if you rear-end another driver and cause $15,000 in vehicle damage, CDW does nothing to cover that claim. The rental company’s waiver only covers the rental vehicle itself.

How does CDW compare to a personal auto policy?

A personal auto policy that includes collision and comprehensive coverage typically extends to a rental car used for personal purposes. The renter’s own policy is primary (in most states) or secondary (in a few, including Georgia – see below), depending on state law. A renter with personal collision/comp may be able to decline CDW and rely on their own policy, subject to their personal deductible and without the voiding conditions that the rental company’s waiver carries.

Georgia law under O.C.G.A. § 40-9-102 inverts the normal priority: the renter’s personal auto policy is PRIMARY and the rental company’s coverage is SECONDARY in Georgia. This is the reverse of most states, and it affects how CDW decisions interact with personal auto coverage for Georgia renters.

How does credit card rental coverage interact with CDW?

Many premium credit cards provide a rental car benefit that either replaces or supplements CDW. When the rental is charged to the card, the card’s benefit typically covers physical damage to the rental vehicle. The benefit may be primary (replaces CDW) or secondary (works above the renter’s personal auto policy). Credit card rental benefits do not cover liability to third parties.

Does my car insurance cover a rental car in Georgia?
Rental car accident in Georgia: who pays?
A coverage review can confirm how your current auto policy responds to rental cars before your next trip.