What is a Collision Deductible Waiver?

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two men involved in car accident

You’ve got bodily injury coverage, understand property damage, and 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 bright.

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…

Key Takeaways:

  • Paying a few extra bucks a month for a Collision Deductible Waiver could save you hundreds of dollars out-of-pocket if your car is damaged in an accident with an uninsured at-fault driver.
  • People living in heavily populated cities may benefit greatly from a CDW because the likelihood of getting into an accident is more common.
  • If a CDW isn’t for you, consider a lower collision deductible or a vanishing deductible on your policy to keep your out-of-pocket costs lower in a situation where a CDW might not apply

What is a Collision Deductible Waiver?

A collision deductible waiver will allow you to forgo paying your policy’s deductible if the at-fault driver is an uninsured motorist. This waiver is usually optional, so you will have to pay a few extra dollars per month to add it to your policy. 

However, deductibles can be up to 2,000 dollars, so for a few extra bucks a month, you could be saving thousands. 

If you only have collision insurance and get into an accident, you will have to pay your deductible before your insurance company kicks in to cover the claim. The collision deductible waiver eliminates the need to pay your deductible first. Instead, your insurance will cover all the costs associated with the repair of your car.

How Does a Collision Deductible Waiver Work?

Simply put, it’s an add-on insurance coverage. It will pay your collision deductible if your car incurs damages 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 agreed to pay the first portion of the insurance claim, usually between $100 – $2,000. 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 a CDW to your policy, your insurer will ‘waive’ your deductible because you were in an accident with an uninsured driver. 

This means your vehicle receives repairs without you having to pay your deductible first. With CDW, the insurance company will pick up the deductible and get the repairs done.

Is a Collision Deductible Waiver the Same as Uninsured Motorist Insurance?

At first glance, it may seem that a collision deductible waiver and uninsured motorist coverage are the same policy add-on. While CDW and UIM are similar, they’re used for different reasons and coverage separate damages. 

Uninsured/underinsured motorist coverage applies to injuries, but not collisions.

If someone is hit by an uninsured driver and is injured, the uninsured motorist on their policy will pay for their injuries up to the policy limit. If the car is damaged in the process, the damages would be covered under the collision portion of the policy. In this case the CDW would waive the deductible, but the damages to the car would still be paid out under collision coverage, not UM coverage.

On the other hand, CDW goes on top of your collision coverage. This waiver removes the deductible and covers all costs associated with the accident if the at-fault driver does not have sufficient coverage. This add-on does not provide coverage by itself and is simply an extra safeguard.

Why do Insurance Companies Offer a CDW?

woman involved in a car accident

Despite the laws, there are way too many drivers on the road that drive uninsured. 

They offer this coverage because insurance companies found that otherwise, law-abiding citizens had to cough up cash when an uninsured driver hit them. 

You’re obeying the law and doing the right thing, but someone else’s lack of insurance will 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.

When Should You Have a Collision Deductible Waiver? 

In some places, the number of uninsured drivers is higher than average. For example, an urban city with lots of traffic may have more uninsured drivers than a rural town with a smaller population. If you live in a place like this, it would be advisable to have a collision waiver as protection from unnecessarily paying your deductible. 

In addition, if your deductible is high, you might find it more cost-effective to pay a little extra each month for your premium by getting a CDW. This way, you avoid unexpectedly being hit with a huge bill that you struggle to pay.

When Having a Collision Deductible Waiver Doesn’t Apply

Collision deductible insurance can lessen your financial burden, but it doesn’t apply in all situations. Most CDW’s small print requires they find an identifiable driver, and that driver is found to be at fault. Being at fault means the other driver is the cause of the accident. 

Here are a few cases where you might not be able to apply your collision deductible waiver. 

  • No-fault accident: For example, if black ice causes both cars to slide into each other, then no one is deemed ‘at fault’. CDW won’t take effect in that case, 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, 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 or car. Your CDW wouldn’t kick in on this occasion even though the light pole is technically uninsured.
  • Part-fault accidents: In some cases, investigators might decide a car accident is 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, to benefit from the CDW.

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

Other Ways to Save Money on Your Deductible 

What if you want to purchase the collision deductible waiver but are unsure if you can afford the extra financial burden? Thankfully, there are other ways to save on the amount of money you pay for your deductible.

These are a few things you can do to save a few extra bucks on your insurance premium:

  • Opt for a lower car insurance deductible: Opting for a lower deductible would lessen the need for a CDW but would increase your monthly premium. Lowering your deductible would apply to more situations than accidents with uninsured drivers. Still, the higher monthly payments that come from having a high deductible could also cancel out the savings you would have in the case of an accident. 
  • Add a vanishing deductible discount: A vanishing deductible is a paid benefit that can decrease your deductible amount. This program will cause you to pay more to your premium every month, but over time could see your deductible reduced substantially or even down to zero. Insurance companies use this to reward safe drivers and allow them to save some money.

Should I Get a CDW?

Now for the million-dollar question. Is it worth it? In most cases, if you have collision coverage on your car, yes. The cost is meager and you get invaluable peace of mind in return. 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 a deductible of $500 or more is a pretty sweet deal.

Getting into an accident is bad enough, and an accident with someone uninsured is worse. If you have a few extra dollars to spare, you may want to consider adding CDW and paying the extra few dollars. It can save you a lot of heartache (and money) down the road.

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. 

See How Much You Can Save

FAQs About the Collision Deductible Waiver

What is a collision deductible waiver? 

A collision deductible waiver (CDW) is an add-on that exempts you from paying your collision deductible if the at-fault driver is uninsured. 

Should I get a collision deductible waiver?

If you live in an area where the number of uninsured drivers is relatively high, you should consider paying a few extra dollars per month for a collision deductible waiver. The cost is low and can save you substantial money in the long run. 

What collision deductible should I get? 

Deductibles generally range between $100 – $1,000. Most drivers choose a deductible of $500 unless they have ample savings to pay more. Whatever amount you choose, make sure that paying for your deductible won’t affect your finances negatively.

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