All you need to know about a Collision Deductible Waiver.
It is common for people to want to buy insurance but do not know everything about it. It can cause them to either overpay for things they need or get coverage for things they do not even need. For example, paying coverage for a shed off your property when you do not even have a shed. This miscommunication can cause more harm than good, which is why you should know everything there is to know about the type of insurance you want before you decide to purchase it in order to fully avail all its benefits and minimise the disadvantages.
One such thing that people often are not familiar with is a collision deductible waiver (CDW) for auto insurance policies. So what exactly is it, why you should get it and is it even worth it? Let’s find out.
What is a Collision Deductible Waiver?
A collision deductible waiver meaning is an add on coverage option that you buy with collision insurance. This will protect you from paying a collision deductible if your car was damaged because of an accident with an uninsured driver.
Usually, you are required to pay a deductible amount when you file a claim with your insurance company in case of an accident. Deductibles are the first portion of the claim you have to pay from your own pocket up to a certain amount and the rest is covered by the insurance company. However, if you have a collision deductible waiver add on, your insurance company will waive your deductible. Which means you would not have to pay any out-of-pocket costs in case of an accident. The repairs from the collision with an uninsured driver will then be taken care of by the company.
Collision Deductible Waiver vs. Uninsured Motorist Property Damage
Collision deductible waiver and uninsured motorist property damage provide the same coverage which is why it is common to confuse the two things. However, they are pretty different.
A collision deductible waiver protects the driver who has collision coverage from any damage caused by an uninsured motorist. Whereas uninsured motorist property damage protects drivers that do not have collision coverage from costs of damage caused by other uninsured drivers.
How Does a Collision Deductible Waiver Work?
Collision deductible waiver will come into effect if your car has been damaged in an accident and the other driver is uninsured.
If you have been in an accident, the insurance company will use your collision coverage to repair your car. However, you would still be required to pay the first portion of the claim, also known as the deductible. This would usually be somewhere between $100 to $1000.
And in case you have been in an accident with an uninsured driver, your collision deductible waiver will kick in if you choose to add that on in your coverage. Your insurer will waive the deductible since you were in an accident with an uninsured driver. This means that you do not have to pay for the repairs on your car as they have been done at no immediate cost to you. With CDW cover, the insurance company will pay the deductible amount themselves and get the repairs done themselves too.
Where the Collision Deductible Waiver May Not Apply
The collision deductible waiver has very limited application. It may not cover you in situations where:
- No other driver is involved. If you were in an accident with a tree or a pole, the deductible waiver will not apply. It is important for another driver to be involved in order for a collision deductible waiver to work.
- The other driver has insurance. In a situation where the other driver you were in an accident with has insurance already, their liability insurance will handle the cost of the repairs and CDW would not be applied.
- A hit and run. Even though there is not much difference between a hit and run and being hit by an uninsured driver, the collision deductible waiver does not apply in this situation.
- You were at fault. The collision deductible waiver only applies when the other uninsured driver is at fault or is responsible for causing the accident. It needs to be to the point that you would not be considered at fault for the accident.
Why do Insurance Companies Offer CDW?
Even though there are laws about it, there are many drivers out on the road that do not pay any heed to the laws and are driving their cars uninsured instead of purchasing car insurance. Since they do not have any insurance that can be used to pay for any damage they might cause to you, you are on your own. In cases where there is only minor damage to your car, you will be the only person responsible. Even if you are not at fault. And that hardly seems fair. Which is why insurance companies decided against law abiding citizens coughing up cash everytime they were hit by an uninsured driver and introduced collision coverage and a collision deductible waiver. It makes no sense for you to spend that much money just because someone else refuses to abide by the rules. And that is how insurance companies saw an opportunity and seized it. Now, even if you are hit by an uninsured driver, you will have nothing to worry about.
Should you get a Collision Deductible Waiver?
The big question in the end is: is collision deductible waiver worth it?
In most cases, having collision coverage on your car can be a good idea. The cost is usually low at around $10 for a six month policy. And to be honest, paying $10 to avoid paying $1000 does not sound like a bad deal.
It is never fun getting in an accident. What makes it worse is if the other driver is uninsured. In cases like these, it is important to have collision coverage so that you do not have to deal with the extra burden of paying for the repairs when you were not even at fault. For people who have a few extra dollars to spare, collision deductible waiver would be a good idea as it will protect them from any unfortunate accident that can easily cause a dent in your pocket and in some cases, you might not even be able to afford it. Paying a small amount now will save you from a lot of heartache later.
However, since the collision deductible waiver only applies in certain situations, it is possible that you may not even end up using it.
You should also consider whether you even need collision coverage. If your vehicle is old, the value of the vehicle might be low in the eyes of your insurer. Thus, the payout might not be as much as you would have paid for in premiums for collision coverage.
Since the cost of the waiver is only a few extra dollars that will be added to your premium which is significantly less than the amount you will have to pay in deductibles. For an advantage like that, it is worth considering whether or not you should get a collision deductible waiver.
The Bottom Line
In the end, a collision deductible waiver can pretty much pay for itself. If you do not get to use it, at least you will have peace of mind when driving out on the road. You will not have to worry about paying a huge deductible, especially if it is something you cannot afford at the moment. You will also not have to worry about the repairs and the damage that can be caused to your car as your insurance company will take care of that.
Just keep in mind that insurance companies have different policies when it comes to auto insurance and other coverages. You might need to shop around and find what is a collision deductible waiver for every insurance company before you decide on one. It is possible that buying one independent coverage option might be better for you than buying it with a pre existing auto insurance policy. It all depends on the insurance company which is why it is always advised to either talk to an insurance broker about your needs or do the research yourself about all the insurance companies offering the collision deductible waiver.