Research from Practical Car & Van Rental has shown that CDW charges for short-term rental vehicles are rising on average more than overall rental tariffs and as the retail customer continues to pay for it, rental rates are remaining low.
This means fleets which are covered by company insurance don't pay the additional CDW levy.
Bolton Agnew, managing director at Practical, said: 'While insurance is the only significant factor driving up costs, rental rates are still appearing artificially low thanks to one or two hidden costs which many companies are using to offset the increased overhead of insurance. A company's own insurance bypasses these costs and, therefore, is the way forward for anyone wanting to negotiate the best short-term deals.'
Practical Car & Van Rental analyses changes in daily and weekly rates quoted by more than 30 randomly selected short-term rental outlets throughout England and Scotland every two months.
The firm has found that the actual advertised rates have remained almost unchanged for the past 12 months but increased pressure on optional extras, such as CDW, has pushed overall costs up.
Through its research Practical found that an average of £7.77 per day per vehicle for extra costs was quoted by the companies most recently surveyed.
This figure is up from £7.30 12 months ago and up from £4.50 in 2000.
A spokesman at Practical added: 'Insurance is becoming more expensive for car rental operators and add-ons are increasing. But as CDW is increasing, rental tariffs are remaining the same, which is a benefit for fleets. Our research has shown that advertised costs are staying the same.'
Thrifty Car Rental has also noted an increase in the cost of CDW, primarily due to underlying surges in insurance costs. Robert Burton, managing director at the group, said: 'Because all excesses have increased, particularly third party, we now have greater insurance costs. The industry is selling more CDW at higher prices to recover greater excesses on insurance.
'Because of these insurance costs the public is paying more than 12 months ago but the underlying rental rates have not changed. This means fleets are benefiting but they do also have a problem with insurance as it has gone up.'
However, other daily rental groups have failed to see an increase in CDW charges.
Neil Cunningham, general manager at Hertz UK, said the group would not increase CDW fees, saying it would effectively lead to a subsidy for fleets covered under company insurance.
He said: 'We have not seen or applied an increase in CDW. In any event, even if we were to do so, any such increase would not be used to cross-subsidise those customers who provide their own insurance.'
What is a CDW?
Collision damage waiver (CDW) is an additional levy paid on top of the daily rental charge. This significantly reduces the amount of excess drivers pay in the event of an accident. For example, by paying £5 CDW excess could be reduced from £500 to £100.