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What is loss damage waiver

what is loss damage waiver

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Optional Coverage

The nonprofit financial assistance organization Crown Financial Ministries explains that a loss-damage waiver and the similar collision-damage waiver, sometimes respectively known as an LDW and a CDW, are optional services and that drivers have no obligation to take out these policies when renting a car. Crown goes on to explain that a loss-damage waiver only relieves the driver of financial responsibility to the rental agency that results from loss of use of the car, and that the policy does not help pay for repairs after a collision. Both LDW and CDW policies serve as supplemental insurance and car rental agencies do not mandate that drivers accept the additional protection.


According to the car rental agency Dollar, a loss damage waiver protects drivers from financial liability when the agency cannot use the vehicle to produce a profit. If a rental company normally rents a vehicle for $50 per day, for example, and an uninsured renter has a collision that renders the car unusable for 10 days, the agency may bill the renter $500 for loss of use of the vehicle. If the same driver pays for a loss-damage waiver when renting the car, though, the rental agency may not hold the driver responsible for

the cost of the unrentable vehicle.

Other Coverage

Drivers who rent cars typically already have their own full-coverage insurance policies, and a 2008 article in "USA Today" notes that most car insurance policies extend coverage to include rental vehicles. In addition, car rental companies usually require renters to secure rented vehicles with a major credit card, and many credit-card issuers also offer a form of supplemental insurance that makes the loss-damage waive unnecessary. Drivers may also have other supplemental coverage, like that provided under many corporate travel policies, that further reduces the need for optional rental agency protection.


Even though car rental agencies encourage drivers to pay for the loss-damage waiver with the promise of no financial obligations after an accident, a 2010 story on Colorado's KKTV news station chronicled the story of one man who purchased the waiver but still received a bill for the rental company's losses. According to the news story, that driver's rental agency voided the loss-damage waiver because the driver received a traffic ticket. The Dollar website further explains that drivers who violate the rental agreement, receive a traffic citation, do not notify both police and the agency after an accident or even leave the keys in the vehicle may have the waiver voided.

Category: Forex

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