DECADECA Travel and Tourism Practice Exam

What is a loss damage waiver (LDW) in car rentals?

1. Insurance offered for tire damage

2. A form of insurance covering renters in case of an accident

3. A service fee for additional drivers

4. A maintenance fee for the rental period

The correct answer is: A form of insurance covering renters in case of an accident

A loss damage waiver (LDW) is a specific type of coverage often offered by car rental companies that protects renters from financial responsibility in the event of damage or theft of the rental vehicle. When a customer opts for LDW, they essentially agree to waive their right to charge them for certain types of damage incurred while the vehicle is rented. This means that if an accident occurs or the car is stolen, the rental company typically absorbs the costs, limiting or eliminating the renter's financial liability. This coverage is particularly beneficial for renters who may not have their own personal auto insurance that extends to rental vehicles or those who are traveling in an unfamiliar area and might be at higher risk for accidents. By choosing LDW, renters gain peace of mind knowing they are protected against potentially high repair or replacement costs. The other options do not accurately represent what LDW entails. For example, while tire damage insurance is a separate topic, LDW encompasses a broader coverage range. Similarly, additional driver fees and maintenance fees are entirely different aspects of car rental agreements and do not relate to the protection against loss or damage that LDW provides.