When you add collision deductible waiver (CDW) to your auto insurance policy, you don’t pay deductibles if someone hits your vehicle and you have to claim on your Collision coverage. In most states, the other driver must be uninsured as well for you to be able to use your collision deductible waiver. It is a highly specific product that meets certain gaps in the market, especially to provide protection when you are hit by another vehicle and you aren’t at fault.
For collision deductible waiver to apply, you mustn’t be at fault and the other driver must be the at fault party (according to your state’s rules) and -in most states- the at-fault driver must be uninsured as well, which means you cannot use it for hit-and-run accidents because you don’t know the insurance status of the driver.
This option is extra useful if you have a pretty high collision deductible like $1,000 or more. Often good drivers choose this option because they don’t anticipate making a claim and avoid paying high premiums. That would be a hefty amount to pay for someone else’s fault.
CDW is only applicable if you have a car insurance policy with Collision coverage and work in association with it and it only pays if Collision coverage is the primary coverage paying for your damages. People with older vehicles may choose to buy a Liability only policy. In such cases, they may want to consider Uninsured Motorists Coverage to protect themselves against the possibility of getting hit by someone with no insurance. UMC offers injury and property damage compensation just like Liability but for you and your passengers, in case you are hit by an uninsured driver.
Uninsured motorist property damage coverage (UMPD) is a coverage, which pays for damages to your automobile after an accident caused by an uninsured driver. Although often used as a replacement for UMPD coverage, collision deductible waiver is an auto insurance provision that comes with collision coverage and pays the deductible when another driver causes damages to your vehicle and often the other driver must be uninsured.
Collision deductible waiver has a limited use and companies may only offer it in a limited number of states. For example, UMPD coverage can only be bought if the policyholder doesn’t have collision coverage in California. So, motorists there have to get CDW with their collision coverage to replace the UMPD they would miss out on for having Collision coverage in their vehicle insurance policy. So, California is one of the states, CDWs are available and helpful to solve a particular problem.
You accept that you are going to pay out of pocket for your damages in case you crash your automobile. But you shouldn’t suffer the loss when someone else causes the incident. If they had liability car insurance, it would have paid your losses. If not, you can use your own uninsured motorist coverage to get compensated. If UMPD coverage isn’t available and you have collision coverage already in your policy, collision deductible waiver is a good replacement to cover this area.
Usually, additional premium for CDW is not much but its scope and limit are pretty tight as well that there is a chance you would never need it. According to a study you may need to spend between $1 to $20 depending on several factors that you might as well just have it, especially now you know what it does.
Remember that it doesn’t help in any other case but when hit by another motorist, most states require that motorist to be uninsured, for you to be able to claim the CDW benefits. Of course, you need to have Collision coverage to be able to include the deductible waiver as well. And it has no use in single vehicle incidents and when you are at fault.
Furthermore, it may not be available in certain jurisdictions and a few companies may not offer it. Yet again, some states have a partial fault law in which you may not be able to claim against others if you are even partially responsible and cannot use this waiver.