Collision damage waiver (CDW)

Collision damage waiver (CDW) is an optional insurance coverage one can purchase when renting a car. It protects a renter from being financially liable for damage to the vehicle. 

A car rental may have a high deductible policy, under which you would be liable for a significant amount of damage costs. However, by purchasing the CDW, you reduce or eliminate this high deductible, shifting most or all of the financial responsibility for damages to the rental company.

CDW generally covers damage to the rental vehicle caused by collisions, accidents, theft, vandalism, natural disasters, etc. Depending on the company, the exclusions may include damage due to reckless driving, driving under the influence, off-road driving, or driving without authorization.