Car Rental
Rental Car Insurance Explained: Excess, CDW, and What You Actually Need
Rental car insurance terminology is designed to confuse — here's what each term actually means for your wallet.
Quick answer
CDW (Collision Damage Waiver) reduces your liability but rarely to zero — that remaining liability is the 'excess'. Third-party excess insurance, bought separately and often far cheaper, covers that gap.
The key terms, in plain English
CDW limits what you'd pay if the car is damaged, but almost always leaves an 'excess' — anywhere from a few hundred to a couple of thousand dollars — that you're still liable for. Rental desks often offer to reduce this excess to zero for a steep daily fee.
A cheaper alternative many experienced travelers use is a standalone excess insurance policy, bought in advance from a specialist provider, which reimburses the excess if you do have a claim — often for a fraction of the counter price.
Pros
- Standalone excess cover is usually far cheaper than the counter upsell
- Most aggregators let you filter for rentals that already include basic CDW
- Paying by credit card sometimes adds automatic secondary coverage — check with your card issuer
Cons
- Excess insurance reimburses you after the fact, rather than preventing an upfront charge
- Some countries/car classes exclude certain coverage types
Recommended partner
RentalCars.com
Airport pickup availability worldwide
