Jessica Fox Last Updated On: June 27, 2023

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What is a Collision Deductible Waiver & Do You Need One?

Unfortunately, the incidents of car crashes have been on the rise since 2009, which means that every time you get behind the wheel, there is a chance you could become involved in an accident; in fact, there are an estimated 5 million car crashes per year in the U.S. alone. 

This is why you have car insurance, to protect you in the event of an accident. However, if someone hits you and they are at fault, then before you get a payout, you’ll likely have to pay a deductible, which could be anywhere from $500-$2,000. 

If you don’t have that kind of money sitting around to pay for someone else’s mistake, then adding a collision deductible waiver (CDW) to your policy could be a smart idea. If you’re not entirely sure what a CDW is, keep reading to find out everything you should know about it.

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What Is a Collision Deductible Waiver?

A CDW is a policy add-on that waives the deductible should an uninsured driver hit you. Should an insured driver hit you, their liability will pay the cost to repair your vehicle.

If it seems extreme to protect yourself from uninsured drivers, consider this: one in eight drivers use the road without sufficient insurance. 

How Much Are Collision Deductible Waivers?

For many Americans, determining whether to add CDW to their car insurance policy comes down to cost, so how much is a collision deductible waiver add-on?

The good news is that CDWs are more than affordable. The average national cost of CDWs ranges from $1-$12 per month. And is a collision deductible waiver worth it? For most people, yes: even at $12 a month, that’s only $144 annually and even at the lowest deductible rate of $500, CDW riders are still cheaper than paying your deductible. 

When Can You Use Collision Deductible Waivers?

Collision deductive waivers only have one use: protecting you from paying the deductible should an uninsured driver hit you. Now, this may seem like a black-and-white answer, but there are a few caveats to consider:
  • You’re at fault: CDWs cannot be used if you are at fault or partially to blame for the accident.
  • No fault: If you’re the only one in the accident, like skidding on ice into a pole, you cannot use the CDW to pay the deductible.
  • Hit-and-run: If someone hits you while you’re out walking, as unfortunate as the situation is, your CDW is not applicable.
Collision deductible waivers are definitely for limited use cases, but they can save you a pretty penny when they do apply. 

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What’s the Difference Between CDW and Uninsured Motorist Coverage?

With so many insurance products on the market, many policyholders may be reluctant to add another rider — even a small one — to their auto insurance policy. This is especially true if the policyholder thinks one of their policy components already covers the damage. For instance, CDWs are not the same as uninsured motorist coverage.

Uninsured motorist coverage protects you from paying for injuries/damages caused by an uninsured/underinsured driver, while CDW only waives the deductible cost should an uninsured driver hit you. 

Do I Need a Collision Deductible Waiver?

The answer depends on your risk tolerance: do you want comprehensive auto insurance that protects you from paying out-of-pocket expenses like deductibles or damages caused by an uninsured driver? If this sounds like you, then you may want to consider the benefit of adding a low-cost rider to your car insurance.

However, if you have a strong risk threshold, you might not want this rider and adding a collision deductible waiver to your policy is completely up to you. 

How to Reduce Your Deductible

For policyholders that want to shrink their deductible amount, there are a couple of strategies you can use, such as:
  • Vanishing deductibles: To incentivize good drivers, many insurance companies offer vanishing deductibles. This is a fancy way of saying good drivers will pay less (approximately $50-$100 a year) for their deductible for every year they aren’t involved in an accident.
  • Lower deductibles: There is also the option to lower your deductible amount, although this will result in higher premiums. The trick is finding the perfect balance between how much you pay for premiums versus having low-to-no-deductible.
If a collision deductible waiver isn’t for you, there are still ways to pay less of a deductible should the unexpected happen. 

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Is a Collision Deductible Waiver Worth It?

Having a CDW ultimately depends on the policyholder. If you don’t have a vanishing deductible and prefer to have the peace of mind that you won’t have to pay a deductible should an uninsured motorist hit you, then you should consider adding a CDW to your policy. 

Ultimately, having a collision deductible waiver is definitely not mandatory, so whether it’s worth it to you depends on your auto insurance needs and your personal risk tolerance. 

Jessica Fox Jessica Fox has been a freelance writer for five years, with a specialty in health, wellness, and insurance. During this time, she’s written for some of the biggest B2B and B2C brands from around the world. Jessica is also the mother of two young daughters and loves coffee, writing, and working out.

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