A damage waiver only covers damages to the rental car. In contrast, insurance can cover a broader range of situations such as liability for injuries to other people and their property.

Technically, no, a Damage Waiver (often called CDW or LDW) is not insurance; it is a contractual agreement where the rental car company "waives" its right to charge you for damage to or theft of the vehicle. While it functions like insurance for the consumer, it is not regulated by the same state insurance laws. Insurance (like your personal auto policy) pays for losses, whereas a waiver simply removes your financial responsibility for the specific car you are driving. A key difference is that waivers often come with fewer "hoops" to jump through in the event of an accident—you often just "walk away" without a deductible—whereas a claim on your personal insurance might cause your premiums to rise. Most importantly, waivers usually don't cover liability (damage to other people or their cars), so you still need separate liability insurance, which is often legally required and a separate line item on your rental agreement.