Is a Collision Deductible Waiver Right for You?
Collision deductible waivers save you from paying the cost of a deductible when you're in an accident with an uninsured driver.
Sometimes called a CDW for short, a collision deductible waiver is an option when you pay for collision car insurance. You pay a few extra dollars each month to save yourself hundreds or thousands of dollars if you have an accident.
There are strict rules for when a collision deductible waiver applies. So it may only benefit you in a few situations.
Note: The acronym CDW may also refer to a collision damage waiver. When you rent a car, buying a collision damage waiver means you won't have to pay to fix the car if it's damaged in a crash.
What is a collision deductible waiver?
A collision deductible waiver saves drivers money if they get into an accident caused by an uninsured driver. If you add it to your policy, your insurance company won't require you to pay your deductible when making a claim in these situations.
A deductible is the amount of money you're responsible for paying when you make a claim with your insurance. For collision insurance, deductibles typically range from $500 to $2,500.
Imagine driving to the grocery store one morning. You turn the corner, and a distracted driver crashes into your car.
If that driver has enough insurance, their liability coverage should pay to repair your car. If the driver is one of the 32 million Americans driving without insurance, they are not in a position to pay for repairs. This forces you to pay the dollar value of your deductible when you make a collision insurance claim.
Collision deductible waivers are designed to address this scenario. You pay a little more up front for peace of mind on the road. In Massachusetts, for instance, it costs an average of $5 each month to add a waiver. Costs range from less than $1 to $12 each month, depending on the company.
Collision deductible waiver | Monthly rate | Total cost during six-month policy |
|---|---|---|
| Yes | $1,095 | $6,570 |
| No | $1,090 | $6,540 |
Assuming accident with uninsured driver
Paying $30 for a collision deductible waiver twice a year is much cheaper than paying your deductible if an uninsured driver hits you.
How collision deductible waivers work in Massachusetts and California
Collision deductible waivers are available in many states. In most states, individual insurance companies define the terms of the CDW. But in California and Massachusetts, the state's insurance regulators define what these CDWs mean.
If you get a collision deductible waiver in Massachusetts, you will not have to pay your deductible when a known driver causes the accident.
California's deductible waiver is slightly different. If you have collision coverage, you can get a waiver for your deductible if an uninsured driver hits you. It applies even to a hit-and-run. But you still have to find the driver or car that hit you and prove they're at fault. This sets the California deductible waiver apart from the CDWs offered in other states.
When a collision deductible waiver will not apply
While collision deductible waivers do offer peace of mind, drivers who buy them shouldn't get too comfortable. They only apply in case of an accident with an uninsured driver who is at fault.
There are a number of similar scenarios in which the collision deductible waiver will not apply and won't help you pay for repairs on your car.
- The accident only involves one car. If you bump into a fence or slam into a highway divider, for instance, you're out of luck. The collision deductible waiver won't cover this accident, and you'll need to pay the deductible yourself.
- The accident is partly your fault. Did you turn at a no-right-on-red intersection? You may be partially at fault even if the other driver crashed into you.
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The laws that define fault differ from state to state. If an accident is partly your fault, your deductible won't be waived. You'll have to pay for repairs.
- The accident is no one's fault. Let's say you were driving during a torrential downpour that caused you and the other driver to hydroplane into each other. Neither of you could have avoided the accident, so neither of you is deemed at fault. Because there is no one at fault, the collision deductible waiver will not apply.
- The accident is a hit-and-run. Did the other driver pull away after hitting you? It's a terrible situation, but the insurance company will not waive your deductible for a hit-and-run in most states.
- Many drivers would attempt to pass off single-car accidents as hit-and-runs so as to avoid paying the deductible. To prevent this kind of deception, insurance companies only waive deductibles when the at-fault driver is identified.
Should you buy a collision deductible waiver?
The collision deductible waiver only applies in a small number of circumstances. That might make it difficult to decide whether you should get one.
It could be a good option if you're the kind of person who wants peace of mind. For only a few extra dollars a month, you'll know that you will not have to pay for repairs, as long as the other driver is at fault.
If the driver is uninsured and you have to use your own policy to cover the car repairs, the CDW will eliminate your deductible. If the other driver is insured, their liability coverage will pay for the repairs.
Another option is to lower your deductible and pay a higher rate instead of getting a collision deductible waiver.
For example, we found decreasing your collision deductible from $1,000 to $500 costs an extra $250 per year. While you'll pay a higher rate, you'll save $500 on any collision claim, not just when a collision deductible waiver applies.
Ultimately, collision deductible waivers only apply in a few situations. If that limited application is worth a few extra dollars to you, go ahead and make the investment. If not, use other methods to get your deductible down.