What is a Collision Deductible Waiver?

May 16, 2018

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You’ve got bodily injury, you understand property damage, you practically wrote the book on medical payments. Then you hear your agent say ‘would you like to add a collision deductible waiver’ and suddenly you don’t feel so smart.

So what is a collision deductible waiver (CDW)? Do all states offer it? Is it compulsory? We’ll cover all that and more, keep reading…

How Does a Collision Deductible Waiver Work?

Simply put, it’s an additional piece of insurance coverage. It will pay your collision deductible if your car is damaged in an accident and the other driver is uninsured. Learn more about collision coverage in this guide.

So let’s break this down.

If you’re in an accident, your insurance company will use your collision coverage to repair your car. When you originally bought your car insurance policy, you will have agreed to pay the first portion of the claim, usually somewhere between $100 – $1,000. That first portion is called a ‘deductible‘.

However, if you are in an accident with an uninsured driver, this is where your CDW kicks in. If you opt to add CDW to your policy, then your insurer will ‘waive’ your deductible because you were in an accident with an uninsured driver. This means that the repairs on your car are done at no immediate cost to you. With CDW, the insurance company will pick up the deductible and get the repairs done.

Why do Insurance Companies Offer CDW?

Despite the laws, there are way too many drivers on the road that won’t purchase insurance and drive uninsured. The problem is that even if it’s just minor damage, you’ll have to pay for it. They don’t have any insurance that you can use to pay for repairs, so you’re on your own.

Insurance companies found that otherwise law-abiding citizens were having to cough up a bunch of cash because they were hit by an uninsured driver. You’re obeying the law and doing the right thing, but someone else’s lack of insurance is going to cost you money. Insurers soon got wise to this being unfair. They introduced the collision deductible waiver so that you’re no longer out of pocket for someone else’s carelessness.

Where it Might Not Work

Most CDW’s small print requires that an identifiable driver is found and that that driver is found to ‘at-fault’. At fault is what it sounds like: The other driver needs to be the cause of the accident. A few cases where it may not work…

  • No-fault accident: For example, if black ice causes both cars to slide into each other, then no one is deemed ‘at fault’. In that case, CDW won’t take effect, even if the other driver is uninsured. Bummer.
  • Hit and Run:This is because there is not an identifiable driver. If the driver can later be found and they don’t have insurance, then the CDW would jump into effect.
  • A Single Car Accident: Normally, this is a situation where, for example, you backed into a light pole. There is no other driver, nor another car. On this occasion, your CDW wouldn’t kick in. Even though the light pole is technically uninsured.
  • Part-fault accidents: In some cases, a car accident might be decided to be partly your fault, even if it’s mostly the other driver’s fault (this system depends on your state). In that case, the CDW wouldn’t take effect and you would need to pay your deductible. In legal terms, this is called the “clean hands theory”. You must have clean hands, or no blame at all, in order to benefit from the CDW.

Most importantly, you have to have collision coverage on your car to get a CDW. No collision: no collision deductible to waive.

Should I Get It?

The million dollar question: Is it worth it? In most cases, if you have collision coverage on your car, yes. The cost is very low. We looked at a couple of quotes on Compare.com and found it was usually less than $10 for a six-month policy. Paying out $10 to not have to pay $1,000 or more is a pretty sweet deal.

Getting into an accident is bad enough. Getting into an accident with someone who is uninsured is worse. Then having to pay out a grand on top of that is just kicking you when you’re down. If you have a few extra dollars to spare, then you may want to seriously consider adding CDW and paying the extra few dollars; it will save you a lot of heartaches later.

Whatever your decision, start by comparing your options. Adding a collision deductible waiver with one insurer may be even cheaper than your current policy without one. Compare prices and packages for free today and see how much you can save.

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