A collision deductible waiver is an add-on to an insurance plan that some auto insurance companies offer. If you have a qualifying claim, your insurance company will drop your collision deductible. In other words, the collision coverage on your policy will cover damages to your car, but you won’t need to pay your deductible.
Let’s dig into the basics of collision deductible waivers, how they can be used, and the difference between a collision deductible waiver versus uninsured motorist coverage.
How do collision deductible waivers work?
As mentioned, a collision deductible waiver is optional coverage you can purchase on your car insurance policy. Should you get into an accident on the road and are hit by an uninsured driver, you won’t have to pay your deductible. With a CDW, you can also lower the cost of your collision deductible.
Collision deductible waivers only apply to the collision portion of your coverage. In other words, damage to your car due to colliding with another object, such as another car, a telephone, or a mailbox, and damage relating to potholes.
There are a few situations where a collision deductible waiver doesn’t work. For instance:
If you are liable or partially liable
If you are at fault for the accident or are partly at fault then CDW won’t kick in, and you’re still on the hook for paying your collision deductible.
No one was at fault in the accident
Let’s say no one was at fault in the accident, for instance if a windstorm knocked over a telephone pole, which landed on several cars, including yours. Or, during heavy rains, you and another driver hydroplane into the other. If nobody was technically at fault, then CDW won’t apply.
An insured driver hits your car
In most states, if an insured driver hits your vehicle, then a CDW won’t apply.
If you’re in a hit-and-run
If the accident was a hit-and-run and you don’t get the other driver’s information, then most likely the CDW won’t apply. That’s because, in most cases, you need to verify that the other driver is indeed uninsured.
A CDW when you purchase rental car insurance differs from a standard auto insurance policy. It’s typically offered as an add-on when you purchase rental car insurance. In this instance, the rental car will waive its fees for repairing the rental car should you get into an accident.
How much are collision deductible waivers?
The cost of a collision deductible waiver varies according to the coverage limit and where you live but can range anywhere from $1 to $12 a month, or $12 to $144 a year. The average cost of a car insurance policy in New Jersey in 2022 is $124 a month.
The cost of a CDW is folded into the cost of your policy, and is due whenever you pay your auto insurance premiums, whether that’s monthly, every six months, or annually.
Collision deductible waivers vs. uninsured motorist insurance
Both a collision deductible waiver and uninsured motorist insurance apply to accidents with uninsured drivers. Both also can cover medical bills and property damage. The main difference is that, with a CDW, you’re covered only with incidents that fall within your collision insurance. With uninsured motorists coverage, your insurance policy will cover pretty much any accident where an uninsured motorist is involved.
When should you get a collision deductible waiver?
It largely depends on your situation. But here are some instances when it might be a good idea to add a CDW: If you have a high deductible
New Jersey’s default deductible for collision and comprehensive insurance is $750. It might make financial sense for you to add a CDW to your auto insurance policy. Also, a CDW only applies to accidents covered by the collision portion of your policy. Plus, there are a handful of instances where a CDW won’t apply. For instance, if you are at fault or a victim of a hit-and-run accident, you’ll need to pay your full deductible before you’re covered for any damages.
In New Jersey, the good news is that only 3.1% of drivers are uninsured, the lowest in the U.S.. However, getting a CDW to add an extra level of protection could still be worthwhile.
Whether you think a CDW is a worthwhile add-on is ultimately up to you. To make the choice, see which car insurance companies offer the option, and do your homework to compare costs and policies.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
