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Collision Damage Waiver (CDW) Cover and Car Insurance in India

Team AckoAug 8, 2022

Be it your routine commute between home and office or an occasional weekend getaway, a car can be a convenient travel option. However, not everyone might be inclined towards owning a car, especially due to the high costs involved in owning and maintaining a vehicle. But you don’t need to own a car to avail of its convenience; you can simply rent one! This article is about car rentals with a focus on the Collision Damage Waiver (CDW) Cover and car insurance in India.

Collision Damage Waiver Cover

What is a Collision Damage Waiver?

A Collision Damage Waiver is an insurance cover that can be purchased while renting a car. The Collision Damage Waiver’s meaning lies in its name; it offers a waiver in case of damages to the rented car in case of a collision. Note that this waiver is subject to the terms and conditions of the chosen cover.

Rental cars and Collision Damage Waiver

Traditionally, the rental car business has not been known as an organised sector in India. However, things have changed during the last decade. Due to the influx of multinational as well as domestic companies in this arena and the emergence of and reliance on tech-based operations, renting a car in India has become easy. You can rent a car online within minutes, and you are all to get behind the steering wheel and hit the road on the weekend!  

But before you hit full throttle, you need to think about car insurance. 

  • Cars driven on Indian roads must be insured. It’s the law. 

  • Thus, be it a commercial car or a private car, it must be insured as per The Motor Vehicle’s Act, 1988. 

  • This basic requirement pertains to the Third-party Liability Policy, which is primarily about compensating third parties for injuries, death, and property damage.

In the case of renting a car, the car rental company might have an insurance policy in place, but the question is, does it insure your liabilities? For example, you are driving in a rented car on a curvy hill-station road. Suddenly, some monkeys jumped across the road. As a result, you lose control of the car and hit a tree. Thankfully, you emerge injury free but the car’s front door is damaged. It’s dented.

Here are the two likely outcomes in this scenario.

  • If you had purchased a Collision Damage Waiver Cover (also known as CDW car insurance) while renting the vehicle, then you will not have to pay the car’s repair bill apart from the minor cost not covered by the cover.

  • If you had not purchased a Collision Damage Waiver Cover, then the car rental company will look into the matter as per the agreed terms and conditions of the rental agreement, and you might have to pay for the repairs.

What is included in the Collision Damage Waiver (CDW) Cover?   

The inclusions of a CDW insurance cover can vary. Thus, it’s suggested to go through the cover in detail and get all doubts cleared with the rental company before buying such a cover.

Here’s an overview of what’s generally included in such a CDW insurance cover.

  • Damage to the rented car’s body resulting in dents, scruffs, etc.

  • Theft of the rented car.

  • Cost of towing the vehicle to the nearest garage.

What is not included in the Collision Damage Waiver Cover?

Just as in the above-mentioned section, the specific list of exclusions of a CDW cover needs to be checked before purchasing the cover.

Here’s an overview of what’s generally not included in such a cover.

  • Damages to the rented car’s parts such as wheels, gearbox, windscreen, etc.

  • Damages in case of not following traffic rules.

  • Damages to third parties and their property.

Benefits of Collision Damage Waiver Cover?

If you are renting a car and opting to purchase a Collision Damage Waiver Cover, then you will be able to avail of the following benefits.

1. Save money

With a Collision Damage Waiver Cover, you will not have to spend a huge sum of money from your pocket to repair the car if its body gets damaged due to an accident.

2. Peace of mind

With a theft cover in place, you don’t have to worry about the financial implications of the rented car being stolen while you are resting for the night during a road trip.

How much does a Collision Damage Waiver Cover cost?

Usually, a Collision Damage Waiver Cover is sold via the rental company, as they might have a tie-up with an insurer. Unlike Third-party Car Insurance, the cost of Collision Damage Waiver Cover is not stated by the Insurance Regulatory and Development Authority of India (IRDAI). Thus, it can vary from one seller to the other.

Is it compulsory to buy Collision Damage Waiver Cover while renting a car?

Purchasing a Collision Damage Waiver Cover while renting a car in India is optional. However, make sure the rented car is covered as per The Motor Vehicles Act, 1988. Please speak with the car rental company about this before renting the vehicle.

Also, read: Difference between Comprehensive and Collision Insurance

Collision Damage Waiver insurance for car rentals and car insurance in India

Collision Damage Waiver Cover and a car insurance policy are two different financial products. Here’s a table highlighting the key differences between the two.

Parameter Collision Damage Waiver Comprehensive car insurance
Applicability Applicable only in the case of car rentals/leasing and not for private vehicles. Applicable for private as well as commercial cars.
Purchased by Usually purchased by people who rent the car as a part of rental car insurance. Usually, this type of vehicle insurance policy is purchased by private car owners and commercial business owners (in this case, car rental companies).
Scope The scope of this cover pertains to damage to the rented car’s body and not to car’s parts, such as wheels or interiors. The scope of this cover pertains to wide-ranging damages to a car’s exterior as well as interior as per the chosen coverage.
Mandatory Such a cover is not mandatory. The Third-party Liability part of the cover is mandatory as per the law. Thus, by choosing this cover, one can avail of mandatory as well as wide-ranging motor insurance coverage.

Disclaimer

Note that such an insurance cover is more popular in developed foreign countries as compared to India. The information shared in this article is generic (not specific to ACKO) and only an overview of the concept. It is suggested that you must make an informed decision by going through the details while buying such a cover.

Frequently Asked Questions (FAQs)

Here are some of the top FAQs associated with Collision Damage Waiver.

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Can I purchase the Collision Damage Waiver for my private vehicle?

No, such a cover can be purchased only in case of renting or leasing a car.

Can I convert my private car insurance policy into Collision Damage Waiver for a car that I plan to rent?

No, a car insurance policy and Collision Damage Waiver are two separate financial products, and they cannot be converted from one to the other.

Will I be blamed if the car I rent gets stolen?

If the car you rent gets stolen, you might be required to cooperate in the ensuing legal proceedings. However, as far as reimbursing the car rental company for their loss due to theft, such an instance can be covered if you purchase a Collision Damage Waiver. 

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.

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