A collision deductible waiver is an important component of auto insurance that offers policyholders peace of mind and substantial financial protection in the event of an accident.
With this auto insurance feature, drivers can effectively cover the expense that should have been paid out of pocket when they file a claim for damages stemming from a collision.
In essence, it enables policyholders to forgo paying their deductibles in the event of a covered accident.
Notwithstanding, it is essential to be aware of the specifics, advantages, and drawbacks of a CDW in order to ensure that your coverage matches your unique needs.
In this blog post, we will shed more light on the collision deductible waiver. We’ll highlight what it means and how it works, including the pros and cons.
What Is A Collision Deductible Waiver?
A collision deductible waiver, otherwise known as CDW, is usually an optional auto insurance coverage that enables policyholders to waive a collision deductible in the event of a covered accident.Â
Most insurance companies allow drivers to include CDW as an add-on to their policy for protection against accidents in which they are not at fault.
This insurance feature essentially helps to lessen the policyholder’s financial stress by paying the deductible for the collision claim.
Let’s say you got involved in an accident with a driver who is uninsured or underinsured. This waiver covers the deductible you are supposed to pay out-of-pocket for the damages incurred.
How Does A CDW Work?
Usually, the insurance company you bought your collision deductible waiver from determines how it works.
As mentioned earlier, this feature allows policyholders to waive deductibles when filing a claim stemming from a collision. This means that you do not have to pay out-of-pocket the amount you are required before insurance coverage kicks in.
When a driver covered by this waiver gets into an accident and makes a claim. The insurance pays for all repairs without taking off the predetermined amount that should have been paid before coverage is activated.
This auto insurance feature is very helpful for people who wish to lessen their post-accident financial load.
However, it’s important to note that collision deductible waivers sometimes come with particular eligibility restrictions, such as the sort of accident or the involvement of another party, and may lead to higher rates due to increased risk as perceived by the insurer.
Do I Need A Collision Deductible Waiver?
Whether or not you need a collision deductible would be determined by your risk level and unique driving needs.
While it is not a mandatory but optional feature, we often encourage drivers to include a collision deductible waiver in their auto insurance policy.
By doing this, you need not worry about financial burden if you are involved in a severe accident with an uninsured or underinsured driver.
Also, for those who live in an area where uninsured rivers are on the high side, purchasing a CDW is a smart choice.
Nevertheless, to be on the safe side and ascertain whether you need a collision deductible waiver, we advise that you reach out to an experienced insurance agent.
They are in the best position to offer guidance and proffer options that match your coverage needs and budget.
Pros Of A Collision Deductible Waiver
Adding a CDW to your auto insurance policy is an ideal option. This is especially for those who seek protection in the event of getting into an accident with an uninsured driver.Â
Highlighted below are some of the advantages of this feature:
- It helps eliminate out-of-pocket expenses for deductibles after an accident.
- offers financial relief and protection
- simplifies the claim process by reducing upfront costs
- Highly beneficial to drivers with high deductibles
Cons Of A Collision Deductible Waiver
Undoubtedly, a CDW is an effective strategy that guarantees financial security and peace of mind.
However, while we consider the upsides of this feature, we can’t rule out its disadvantages. Here are some of the drawbacks of a collision-deductible waiver:
- There’s a potential for higher premiums
- There are cases where you will still be required to pay deductibles, such as accidents you’re deemed responsible for.
- Not all auto insurance companies offer this feature.
- The collision deductible waiver does not offer coverage for non-collision accidents.
Frequently Asked Questions
How Much Does A Collision Deductible Waiver Cost?
The exact amount you will be charged for a CDW largely depends on the insurance company you are working with. The cost of a CDW differs significantly across multiple insurance companies; hence, the difference in price. Other factors like driving history, overall policy, and amount of our deductibles also affect the cost of a CDW.
When Can’t I Use A CDW?
There are certain scenarios where a CDW is not applicable. For instance, if you are deemed responsible for the accident that occurred. You are required to pay the deductible amount to cover part of the loss and damage incurred.Â
In addition, if the accident was caused by a hit-and-run driver, it would be difficult to claim a collision deductible waiver.
Although the rule for hit-and-run accidents varies across states, you won’t be able to use your CDW in most cases.
What Happens If I Don’t Have A Collision Deductible Waiver?
If you get into an accident and your auto insurance policy does not include a CDW, you are required to pay the deductible amount out of pocket when filing a claim for the collision.
Is A Collision Deductible Waiver Worth It?
The answer as regards the worthiness of a CDW usually depends on your driving habits and financial obligations.
If you are the type of person who values financial security and wishes to avoid out-of-pocket costs in the event of an accident. Then you should get a collision deductible waiver.