State Farm Auto Insurance & Rental Car Coverage

Do you know if your auto insurance company will cover you in an accident in a rental car? According to a survey by Progressive Insurance, only 25% bother to ask. We are looking into booking a rental car for a week, so I called State Farm to double-check what the current rules are. A week of loss-damage waiver (LDW) would cost well over $100, so it was definitely worth a phone call.

Below is what I got from my agent, but I’m sure that auto insurance laws vary by state, so don’t assume the following extends to you. Call yourself! If you’re really serious, you’ll get them to show you where all this is written out in your insurance policy. I know I kept mine somewhere.

Liability Coverage. Your existing limits extends to the rental car.

Comprehensive Coverage. This extends to the rental car. Your same deductible applies.

Collision Coverage. This extends to the rental car. Your same deductible applies.

Other Possible Charges
This could be good news for some, but perhaps not quite so good if you have high deductibles. In addition, she did point out that there are certain things that State Farm will not cover from the rental car companies.

  • Claims Processing Fees or “Administrative” Charges – If you get in an accident, it sounds like they can charge you a fee just to deal with it. Blech.
  • Loss-of-Use Charges – The rental car company will claim that for every day the car was being fixed, they could have rented it out. They don’t even have to prove that they were out of cars at the time.

Secondary Rental Car Insurance
This is where the secondary rental car insurance from credit cards can come in handy. Details can still vary depending on the specific card, so look for specific wording in the paperwork that they mail you with the tiny print on amazingly thin paper. Here’s some sample info from Visa:

Visa Auto Rental CDW reimburses you for the deductible portion of your personal automobile insurance, valid administrative and loss-of-use charges imposed by the rental car company, as well as reasonable towing charges resulting from covered damage or theft of the rental vehicle while it is your responsibility.

This seems to plug in the remaining holes in coverage, besides the vague usage of the word “valid”.

Unlimited Non-Owned Car Coverage (UNOC)
Another option is to purchase an additional rider on your auto insurance, which State Farm calls UNOC. She quoted me about $30 per 6-month period. However, you can simply add it on and take it off for something as short as a month, which on a pro-rated basis would cost only $5.

Comments

  1. Another very timely post, thank you! I’m renting a car in two weeks and was going to email my agent. (Country Insurance) I’m hoping to find out the same.

  2. sillycat says:

    State Farm here too. All insurance will extend to rental cars in PA.

  3. I read an article about this from March 2008 which may help explain some of the fees rental car companies charge: http://www.denverpost.com/travel/ci_8625501

    Rental car insurance info by rental car company (March 2008): http://www.denverpost.com/travel/ci_8651913

  4. It’s so annoying how the rental agents sometimes give the hard sell on the LDW, even though I already have full coverage from my own insurance. I guess that is a big money maker for them.

  5. You might also check the policy of the credit card issuer whose card you use to pay for the rental car. Years ago, my boyfriend and i totaled a rental car while on vacation in middle-of-nowhere West Texas. As i recall, his Amex card covered us and the rental car company even gave us another car to use for the duration of our trip. Amazing!

  6. +1 to the above. Many times, your major credit cards will cover damage and fees incurred, post-accident, if you use their card for purchasing of the car rental agreement.

  7. Good tip. This is something that is important to check about in advance. I’ve paid for insurance that I didn’t need in the past simply because I wasn’t sure what my own insurance covered at the time.

  8. An issue regarding loss of use: some credit card companies will insist on seeing the rental company’s use log, and then the rental company refuses to provide it. So the consumer is caught in the middle. See Ed Perkins’ SmarterTravel website at http://www.smartertravel.com/travel-advice/the-cdw-gap-where-it-stands.html?id=2460802

  9. just a heads up, I just rented a moving truck and my insurance did not cover moving trucks, though I also noticed that it covered rental cars with the same coverage provided on my car.

  10. Pretty much all insurance is a waste of money. Not only are you paying for your “insurance” but you are paying for all the fraudulent claims, and million dollar executive bonuses, as well as all the other overhead in running the company.

    Save all the money you pay towards insurance in a savings account and before long you won’t need insurance anymore.

  11. I got the same response from my State Farm agent in Iowa. The policy covers me driving my vehicle, someone else driving my vehicle, and me driving a rental car. The reason rental agents are always trying to upsell the coverage is because they get commission from it. You may even be able to get a better rate if you mention that you would get the insurance (better return for them) and then cancel the insurance the next day.

  12. Josh: Your advice “Save all the money you pay towards insurance in a savings account and before long you won’t need insurance anymore.” is the dumbest thing anyone could have said.

    At times, spending money to get some peace of mind isn’t a bad idea at all. After all, money isn’t everything, but a mind at ease is worth everything.

  13. This is great, we just paid thru the nose in Seattle for the CDW coverage on a car because we carry high deductibles and there was a consumer broadcast on NPR that advised taking the CDW! I will call All State the next time we travel.

  14. Most credit card are secondary. AE has additional rental car insurance program for less than $20 (I forgot exact number) for the whole trip up to 30 days (I think). It will be the primary. So you won’t need to pay your deducible and you won’t have a accident record if not over the max. coverage.

  15. Mississippi Mike says:

    I am firmly with Josh.

    The Insurance industry provides a very poor service. Most of it is just legalized crime.

    The legal system, and the insurance industry, has made life in America worse for all. I dont understand why the insurance industry has not been targeted and criticized more in the national health care debate. They have certainly made health care worse. And I dont understand why more people are not critical of the insurance industry.

  16. If you don’t want to pay for your insurance you can simply go uninsured. Then when you hit someone, you can foot the whole bill. I hope they don’t have long-term health problems that require thousands of dollars of care every year…

    Or you can put up a bond with the state, equivalent to its combined liability limits. I sure don’t have that kind of money sitting around, so that won’t be my option, but as long as you have the bond you don’t have to pay to an insurance company.

  17. Sarah, I think it is illegal to drive in the US without at list liability insurance. The reason is – they want to make sure the victim will get the money even if the driver that caused accident is broke. I am sorry Mississipi Mike, but I don’t want to be hit by a driver who is broke…

    On the other hand, nobody forces you to buy health insurance. You can go without one. Then if you get seriously ill, good luck paying for it…

  18. This one is a no-brainer.

    JUST USE YOUR AMEX. I have read numerous reviews similar to Fern’s above on the LDW coverage provided when you book with your AmEx card and almost all were very positive. No hassle, no worries, no additional fees, period.

  19. most credit cards provide secondary rental car insurance , meaning if you had auto insurance that insurance will be primary & pay for your at-fault accident & all the credit card would pay is the deductible for that insurance

    The amex premium car rental protection on the other hand provides primary coverage as has been noted above , but it only covers the rental car so your auto insurances still is primary for liability coverage in the event of an at-fault accident.

    so its a decision between paying amex the $20/$25 to shift some of the risk from your insurance vs going all in with your insurance.

  20. Rogr345 says:

    You are all correct but if you read the fine print you will see credit card coverage kicks in after you max-out your personal coverage (which isn’t likely). I know that all the guys writing books on how to save your money tell you to skip the insurance when renting cars (because of your existing coverages). Let me point out more than likely you are driving an unfamiliar car in an unfamiliar area so the chances you are going to have an accident are higher. Also if you have a problem you are dealing with a remote agent and unsimpathetic rental agents. If you get the waiver and total the car they bring you another, if you don’t they leave you on the side of the road and insist you fill out paperwork immediately(they want to get thier car paid for). Not to mention that your personal insurance will increase. It’s worth the hundred bucks believe me.

  21. I just had a positive outcome with Visa’s credit card insurance. They paid a $1200 claim for my fender bender, even including the rental company’s Loss of Use claim and their $100 Administrative Fee. It took quite a bit of diligence to provide the required paperwork, but overall it was a reasonable process — certainly not a run-around.

  22. State Farm does NOT cover anyone on a rental car damage except a “relative”. A relative is defined as someone who makes their primary residence at your home.

    Trust me on this. I just got nailed for $8k plus because my daughter was driving and I thought she was covered. State Farm says no; she is not covered because she is not a “relative” because she does not reside with me.
    She is on my policy as a “listed driver” but apparently that does not apply to rental cars.
    She was also authorized as a driver by the rental co.

    Agent is useless and has no influence. State Farm makes no exceptions. I have been with them for over 35 years with up to 4 cars and no accidents.

    Jim

  23. State Farm is only valid for rental cars in the US and Canada. It cover nothing outside those two countries.

  24. I just spoke with my State Farm agent here in Arizona and she said for $30 I can buy a waiver for my rental car. She said only my deductible would apply if necessary for anything such as theft and collision. The loss of use fees, administrative fees and other BS rental car fees would be taken care of by the waiver in case of loss. That’s $30 for six months but she said I could take the coverage off after I am done renting the car so basically I will be paying roughly $6 for the waiver if that.

    She also noted that if I rented a car from Enterprise or Hertz I wouldn’t need to buy the waiver because State Farm and these two rental car companies have an agreement with each other to waive the fees because State Farm sends them business.

    AMEX has good coverage as well but why pay $20 when its free with Enterprise and Hertz if your a State Farm customer.

  25. I am an American living overseas. I travel to the US to visit family maybe three times a year. I don’t have any auto insurance. When I rent a car, I pay an arm and a leg for extensive coverage. Question: Is there an auto insurance that I can buy for when I visit the US? I pay anywhere between USD 300 USD 500 for auto insurance when I visit. Thanks in advance for your help.

  26. Is there any coverage for driving someone else’s vehicle that isn’t insured? I was test driving a truck and got stopped and was cited for not having insurance. The citation could cost me 30 days in jail and $300 unless I can provide insurance or work out agreement with prosecuting natty.

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