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Collision damage waiver has always been marketed as a low-ball or bait and switch practice. That is, one would make a car reservation over the phone for a given rate; only after you arrived to pick up your car would you be made aware of the need to purchase CDW. While there is usually no requirement to purchase CDW, customers are often uncomfortable exposing themselves to a large liability, with the result that many would buy such coverage, without the opportunity to shop around for the best deal or even to determine if their personal automobile insurance would possibly cover them. Not only have consumers not had the opportunity to shop around, CDW coverage has generally not been subject to state insurance regulations because, well, because the car rental companies say it's not insurance. (Even the FTC press release about this endorsement refers to CDW as collision damage waiver insurance.)
The loss exposure for CDW is only for the loss of the rental company's vehicle (plus padding such as loss of rental value), not for the much greater liability that can result in the event of death or injury to other parties. Yet, the annualized rate charged for CDW is typically about $5,000. And even at this bloated price, most contracts provide that the CDW does not apply if the driver was violating any traffic laws when the accident occurred. The net result is that renters who select CDW pay lots of money for coverage that is often not as good as that provided at no extra charge to people who charge their rental on certain credit cards.
At the time that some credit cards started offering free CDW coverage, car rental companies typically capped the renter's liability to $3,000. As a result, the credit card coverage imposed this same limit. The result was that car rental companies eliminated the limit on the customer's responsibility. It took a couple of years for the credit card companies to expand their coverage to the full value of the car.
This probably means that car rentals in these states are less likely to offer low-ball rates, since they are no longer able to pump up the price at the last minute through CDW. In effect, consumers who do not have access to or knowledge of much cheaper coverage, and hence who are likely to purchase CDW, are effectively subsidizing the rentals charges for those drivers who do not purchase CDW.