Does State Farm Offer Rental Car Insurance?

Last Updated on June 9, 2023

State Farm insures millions of vehicles across the United States. If you rent a vehicle and have State Farm insurance, then State Farm extends your policy to the rental car.

Like most other insurers, State Farm covers rental cars with the same coverage as your personal policy. State Farm also provides rental reimbursement coverage, which could cover the cost of renting a vehicle after an accident.

Keep reading to discover how your State Farm insurance policy covers rental cars.

Table of Contents:

• Yes, State Farm Covers Rental Cars
• State Farm Rental Car Insurance Exclusions and Limits
• How State Farm’s Rental Car Insurance Works
• How the Rental Car Company’s Insurance Works
• How State Farm’s Rental Reimbursement Coverage Works

Yes, State Farm Covers Rental Cars

If you have an ordinary auto insurance policy with State Farm, then your policy will cover you when renting a vehicle.

State Farm extends the same coverage on your personal policy to your rental car.

If you have full coverage car insurance, for example, then your rental car will have full coverage car insurance. If you have minimum liability coverage, then your rental car will have minimum liability coverage.

Because you have auto insurance with State Farm, you could turn down the rental car company’s insurance coverage. However, because of limits and exclusions, it may still be in your best interest to buy insurance from the rental car company.

State Farm Rental Car Insurance Exclusions and Limits

State Farm, like all insurers, has certain exclusions and limits on its rental car coverage. Here are some things to be aware of before renting a vehicle:

You Pay Your Deductible After a Loss: If you crash your rental car, then State Farm handles your claim like they would handle a claim on your ordinary vehicle. That means you pay your deductible, and State Farm covers the remaining costs. If you have a high deductible, then it may be worth buying the LDW/CDW from the rental car company.

Your Premiums Could Rise After a Claim: If you turn down the rental car company’s insurance, then State Farm is the primary insurer for the rental car. That means State Farm processes your claim like they would process a claim on your personal vehicle. If you were at fault for the accident, then your premiums will rise. You could pay higher premiums for three to five years because of a single accident with your rental car.

Country Restrictions: State Farm should cover you when renting a vehicle in the United States, United States territories, and Canada. However, it does not typically cover vehicle rentals outside of these areas. If you are renting a car in Mexico, for example, then you may need to buy insurance from the rental car company.

You Have the Same Limits and Coverages as Your Personal Policy: If you’re renting a $30,000 luxury sedan but only drive a $10,000 vehicle at home, then you could be underinsured when renting the vehicle. State Farm applies the same coverages and limits to the rental car as you have on your personal policy, which could leave you underinsured.

Added Fees from the Rental Car Company: Even if State Farm covers the cost of repairing the rental vehicle after a loss, the rental car company could charge additional fees that aren’t covered by insurance. Rental car companies charge loss of use fees, for example. You may also pay fees based on the depreciation in the value of the vehicle after a loss, among other expenses. If you buy the CDW or LDW from the rental car company, then you avoid these fees.

No Coverage for Non-Standard Vehicles (Like Moving Trucks or RVs): A standard State Farm car insurance policy will not cover alternative vehicles, certain large vehicles, and other unique rental vehicles. If you’re renting a moving truck or van, for example, then State Farm generally does not cover that rental vehicle.

No Coverage for Business Trips: If you’re renting a vehicle for a business trip, then State Farm will not cover you with a standard personal auto insurance policy. Instead, you may need to buy added coverage from the rental car company or add business coverage to your personal State Farm policy.

How State Farm’s Rental Car Insurance Works

State Farm’s rental car coverage works similarly to an ordinary car insurance policy.

Here’s how it works:

• You have an active State Farm auto insurance policy and rent a vehicle. Your State Farm auto insurance policy should extend to cover that rental vehicle.
• If you injure someone while driving your rental vehicle, then State Farm covers your liability via your liability coverage, which is required in most states.
• If you damage the rental vehicle in an accident or if the rental vehicle is stolen, then State Farm covers the loss via your comprehensive or collision coverage. You pay your deductible, and State Farm covers all remaining costs of repairing or replacing the vehicle.
• After a claim, State Farm raises your rates. You’ll pay higher insurance premiums for three to five years – assuming it was an at-fault accident and you don’t have accident forgiveness.

How the Rental Car Company’s Insurance Works

Can you turn down the rental car company’s insurance if you have State Farm? To answer that question, it helps to understand how the rental car company’s insurance works.

All rental car companies offer a collision damage waiver (CDW), also known as a loss damage waiver (LDW). This coverage waives your liability for any damage to a vehicle after a loss.

The CDW/LDW is typically priced at around $10 to $50 per day. If you damage your rental vehicle, then your rental car company makes a claim through their own insurance company. You don’t deal with State Farm, nor do you pay a deductible.

Rental car companies also offer personal possession coverage, personal injury protection, medical payments coverage, and emergency roadside service, among other optional insurance add-ons. If you already have homeowners or renters insurance, then your possessions in the rental vehicle are covered (which means you receive compensation if someone steals your luggage). Similarly, if you have health insurance, then you don’t need to be doubly insured with extra personal injury protection or medical payments coverage from the rental car company.

Generally, a driver with a full coverage State Farm policy with high limits can decline the rental car company’s insurance. However, drivers with State Farm policies with low limits may need to buy added coverage.

How State Farm’s Rental Reimbursement Coverage Works

State Farm offers a different type of rental car insurance called rental reimbursement coverage. If you buy this optional policy, then State Farm could cover the cost of renting a car after an accident.

Rental reimbursement is typically available for $5 to $10 extra per month. After adding it to your policy, you receive compensation from State Farm if you need to rent your vehicle after a covered loss.

If your ordinary vehicle is involved in an accident or stolen, for example, and you need to rent a car to get around, then State Farm covers the cost of the rental car, up to a certain daily maximum limit.

Final Word on State Farm Rental Car Insurance

State Farm, like most insurers, extends your personal policy to cover you when driving a vehicle you do not own – including a rental car.

State Farm will cover certain damages to the vehicle and loss of the vehicle up to the limits of your policy. State Farm also covers your liability when driving the rental vehicle, including any damages you cause to other people and property.

To learn more about how State Farm covers rental car insurance, and to verify your coverage options, contact State Farm or review your policy today.