Almost every car rental in Australia includes a “Collision Damage Waiver” (CDW) or “Loss Damage Waiver” (LDW) in the base price. This gives many renters a false sense of security, leading them to believe they have a foundational level of insurance.
This is a dangerous misconception. A CDW is not insurance.
A CDW is simply a contractual agreement from the rental company stating that if you damage the car, they will “waive” their right to charge you the full replacement value of the car (e.g., $40,000). Instead, they will “generously” limit your liability to the standard damage excess—which could still be $8,000.
But the trap doesn’t end there. The limited protection offered by this standard CDW is eroded even further by a long list of car rental CDW exclusions.
The High-Probability Exclusions
Think of a standard CDW as a policy full of holes. And these holes are not for rare, unlikely events. They are for the most common and probable types of damage a driver might encounter. The most frequent exclusions are for:
- Windscreens and all glass
- Tires and wheels
- The vehicle’s underbody
- The vehicle’s roof
- Damage from driving on unsealed roads
- Single-vehicle accidents (e.g., hitting a pothole or a kangaroo)
- Damage from weather events like hail
This creates a scenario of double jeopardy. You could be in a minor accident, pay the full $8,000 excess, and then be charged an additional $1,000 for the cracked windscreen and a damaged tire, as they are not covered by the CDW.
Rental desk staff are trained to “weaponize” these exclusions. When you try to decline their expensive waiver by saying you’ll risk the excess, their next line of attack is, “That’s fine, but you should know that your basic cover doesn’t include windscreens. A single stone chip from a truck is a $1,000 replacement, and you’ll be fully liable for that.”
This specific, fear-inducing scenario is highly effective and designed to devalue any third-party insurance you might have. These exclusions are a key part of a strategy to make you feel exposed.
This tactic is just one part of a much larger, systemic issue. To see how it fits into the bigger picture and to learn how to get truly comprehensive cover that does include windscreens and tires, [read our deep-dive analysis: The $8,000 Handshake: An Investigation into Australia’s Car Rental Insurance Rort.
