Renting a car abroad is often convenient, but when it comes to insurance, many people are uncertain what they’re actually covered for. Two important insurance terms—Collision Damage Waiver (CDW) and car hire excess insurance—can be confusing. This guide clearly explains these terms, highlighting situations where you might unexpectedly end up paying extra.

Understanding Collision Damage Waiver (CDW)

Collision Damage Waiver (CDW) is standard in most European car hire agreements. It drastically reduces your financial responsibility if your rental car suffers damage or is involved in an accident.

Without CDW, you're liable for the entire cost of repair or replacement, which could be financially devastating. CDW reduces this liability to an "excess" amount, typically ranging from £500 up to around £2,000, depending on the vehicle and rental provider.

Always confirm your rental includes CDW before you hire, as it's standard practice but not guaranteed everywhere.

How does car hire excess insurance complement CDW?

Excess insurance is a separate policy you buy from third-party insurers (like RAC) to cover the excess amount you owe if there's an incident. After an accident or damage:

• You pay the excess to the rental company.

• You submit a claim to your excess insurance provider.

• After verification, the insurer refunds you up to your policy limit.

This effectively reduces your total financial exposure to zero, provided you have both CDW and excess insurance in place.

Can you still be charged even with both CDW and excess insurance?

While these policies offer comprehensive protection, certain situations remain where you could still face extra costs:

1. Reckless or negligent driving

Insurance policies always exclude reckless behaviour. If you’re speeding excessively, driving dangerously, or breaking local laws, both CDW and excess insurance may refuse your claim.

2. Damage caused by unauthorised drivers

Only drivers officially named on your hire agreement are insured. Allowing someone else to drive invalidates your coverage completely.

3. Vehicle misuse

Using your hire car off-road, or ignoring specific restrictions outlined by the rental company, will void your cover. For instance, you typically can't drive rental cars on unsealed roads or tracks.

4. Administration charges

Rental companies frequently charge administrative fees for handling claims, which can range between £50-£150. Often, these aren't covered by your excess insurance.

5. Excessive repair costs

Every excess insurance policy has an upper limit (e.g., RAC covers up to £7,500). If repair costs surpass this limit, you must pay the remaining amount yourself.

Common misconceptions debunked

Travellers often misunderstand these protections. Common misconceptions include:

• Believing CDW alone covers all costs. It only limits liability to an excess amount.

• Thinking excess insurance pays directly to the hire firm. You always pay the excess first and then claim it back.

Tips for total peace of mind

Use this checklist to stay protected:

• Confirm CDW inclusion in your rental terms.

• Buy reputable excess insurance separately.

• Always stick strictly to rental terms—no unauthorised drivers or prohibited roads.

• Report incidents immediately, taking clear photos and keeping thorough documentation.

• Submit your claims carefully and quickly after any incident.

What steps to take after an incident

If damage or an accident occurs:

• Contact the rental company immediately.

• Take clear, detailed photos of the damage and keep all documents.

• Pay the excess upfront directly to the hire company.

• File your claim promptly with your excess insurance provider, providing comprehensive evidence.

Final thoughts

Knowing exactly what's covered by CDW and excess insurance will help you avoid unexpected costs, ensuring your car hire experience remains worry-free. Keep this information handy, and enjoy your travels confidently.