A collision damage waiver (CDW) is an optional coverage offered by car rental agencies that helps pay for damage to the rented car. It is also known as a loss damage waiver (LDW) . If a renter chooses to purchase a CDW, the rental company waives the right to pursue compensation from the renter if the vehicle is damaged or stolen. CDW covers auto damage during the rental period and sometimes theft. However, it does not cover damage to other cars, bodily injury to other people, injuries to the renter or passengers, or theft or damage of personal items in the vehicle. CDW is not insurance but instead a modification to the basic rental contract. The renter often has a choice among different coverages for different fees, and CDWs may have deductibles and limits on the amount covered.

When renting a car, the rental company will typically offer a CDW when the renter reserves the automobile or picks up the rental car at the counter. If the renter chooses not to get CDW, they must explicitly decline the optional coverage. Deciding if a CDW is worth it depends on the renters coverage and how much they value the benefit of adding a layer of protection. If the renter does not have personal auto insurance or a credit card with rental car coverage, a CDW may be a good option. However, if the renters credit card has secondary insurance for rental cars, the credit card company only pays for the amount not covered by the renters auto insurance policy. Liability car insurance pays for damage the renter causes to another vehicle or other peoples property if they are at fault for an accident. The renters collision coverage can extend to rental car damage, and their comprehensive insurance can extend to rental cars that are stolen or damaged by fire, flood, vandalism, or other problems.