What Is a Loss Damage Waiver?
A loss damage waiver (LDW) is a contract sold as an optional add-on to your rental agreement that prevents you from having to pay for any damage if the rental car is damaged or stolen. It does not cover other people’s injuries or property damage that you cause.
Key Things to Know About Loss Damage Waivers
- Loss damage waivers are optional and never required to rent a car.
- An LDW will waive your obligation to pay for repairs or the replacement of the vehicle if the rental car is damaged or stolen.
- You’ll pay a daily rate in exchange for the loss damage waiver.
- The waiver covers damage to the rental car and will not cover injuries or other property damage.
- The waiver becomes void if you fail to follow the terms of the rental car agreement or if the damage was a result of you driving under the influence.
- A loss damage waiver may be unnecessary if you have collision or comprehensive coverage on your personal auto policy that extends to rental cars.
- Rental car companies may use the terms “collision damage waiver” and “loss damage waiver” interchangeably.
What Does a Loss Damage Waiver Cover?
A loss damage waiver covers damage to a rental car due to things like an accident, fire, vandalism, or a natural disaster. It also covers theft of the vehicle, as well as loss-of-use fees that rental car companies may charge when the rental car is under repair and not available to be rented out.
| Covered | Not Covered |
|---|---|
| Damage from accidents | Accident-related injuries |
| Damage due to events outside of your control like natural disasters, fire, or vandalism | Damage due to risky behaviors, such as driving under the influence |
| Theft of the vehicle | Property damage you cause (other than damage to your rental car) |
| Loss-of-use fees | Lost, stolen, or damaged car keys / key fobs |
| Towing and administrative charges | Theft of the car due to negligence, such as leaving the car unlocked |
Some other things a loss damage waiver may not cover include towing or tire services not related to an accident and recovery of a stolen car. In addition, violating the rental agreement will void the loss damage waiver, forcing you to repair or replace the vehicle out of pocket.
Examples of activities that can violate the rental agreement include:
- Driving under the influence of drugs or alcohol
- Letting an unauthorized driver operate the vehicle
- Using the vehicle for hire
- Using the vehicle to tow or push anything
- Using the vehicle for racing
- Failing to take precautions to prevent the vehicle from being stolen, such as leaving the doors unlocked overnight
- Failing to notify the rental company when you learn the vehicle is damaged or stolen
How Loss Damage Waivers Work
Loss damage waivers work by relieving you of your obligation to pay to repair or replace a rental, including loss-of-use and administrative charges, in exchange for a daily fee. The damage waiver is not insurance and does not provide liability coverage for injuries or property damage you cause others.
The waiver is in effect 24 hours a day for your entire rental period. If you don’t follow the rules of the rental agreement, the rental company can void the loss damage waiver, and you will be responsible for paying to replace or repair the car out of pocket.
Below, we’ll walk you through how to purchase the damage waiver and how to use it if you ever have to. Bear in mind that a rental car company cannot require you to purchase the loss damage waiver to rent a car.
- Purchase the waiver. You can purchase the loss damage waiver either online when reserving the vehicle or at the pick-up counter for the rental car company.
- Agree to the rental terms. You’ll sign for the loss damage waiver at the same time as you’re signing the rental agreement, and the waiver will be in effect 24 hours a day for the entire rental period.
- Follow the rules. You will need to follow the rules of the rental agreement by not participating in any risky behaviors that can cause damage to the rental car or allow it to be stolen such as speeding, driving under the influence of drugs or alcohol, or leaving the car unlocked. Taking part in these types of activities will void the damage waiver.
- Report any damage. If the rental car does suffer any damage, let the rental car company know and they will handle repairing or replacing the vehicle.
- Pay for any excluded items. Even if you have purchased a loss damage waiver, there may be some items the rental company will require you to pay for – like a car key or fob – if they are lost or damaged.
To learn more, check out WalletHub’s explanation of what happens if you damage a rental car.
Loss Damage Waiver vs. Collision Damage Waiver
A loss damage waiver and a collision damage waiver are pretty much identical except for one difference: collision damage waivers cover damage resulting from a crash, while loss damage waivers cover both damage from a crash and theft of the rental car. Rental car companies may use these terms interchangeably, though, so it’s important to read the fine print of your damage waiver to see exactly what it covers.
To learn more, check out WalletHub’s overview of the difference between collision damage waivers and loss damage waivers.
Is a Loss Damage Waiver Worth It?
A loss damage waiver is worth it if you don’t have a personal auto policy that covers damage to a rental car or rental car insurance from something like a credit card. For the coverage from your auto policy to apply, you will need to have collision and comprehensive insurance. If you’re using rental car insurance from a credit card, you will need to pay for the rental using the card and decline the loss damage waiver.
However, even if you have coverage from your personal car insurance policy or credit card, it may still be worth getting a loss damage waiver.
Reasons Why It’s Worth Getting a Loss Damage Waiver
Prevents premium increases. A loss damage waiver prevents you from having to use your personal auto insurance to cover the damage. If you can avoid filing a claim with your own insurance, you won’t have to worry about your premium increasing.
Covers you while driving excluded vehicles. Some insurance companies and credit card companies may not offer coverage for certain types of vehicles, such as a rental truck of a particular weight or size. Without the loss damage waiver, you will have to pay for damage to such rentals out of pocket.
Protects assets. If you use your personal auto insurance policy to pay for damage to a rental car, your insurer will only cover the damage up to your policy limit and you will be responsible for the rest. With a loss damage waiver, you may not have to worry about going into debt paying the remaining balance, since the waiver will cover the whole car.
It’s important to note that a loss damage waiver will only cover damage to the rental car. It will not cover damage to other vehicles you cause or accident-related injuries. Check out WalletHub’s complete guide on rental car insurance to see what other types of coverage you may need when renting a car.
Loss Damage Waiver Cost by Rental Company
*Notes: Rates are based on a mid-sized sedan. Actual prices may vary.
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