Does My Auto Insurance Cover Me While I’m Abroad?

One of the best ways to travel while abroad is in your own rented car. Compared to organized group trips and public transportation it’s a breeze, allowing you to go where you want when you want. As convenient and comfortable as it may be, however, it also comes with responsibilities. One of these is having the proper insurance coverage. If you’re thinking of driving a car outside of the United States, you may be wondering how your own current car insurance coverage fits into the equation.

Car Insurance in Other Countries

The answer is that by and large, it doesn’t: When you insure your car you’re insuring it for use in this country only. There are important exceptions.

One of these is Canada. Canada needs proof of insurance in the same way we do, and car insurance policies issued by American providers are legally valid. So, when you drive your car into Canada, you’re covered.

Mexico is a different story. Laws here are different from those in the U.S. and Canada, and the Mexican government requires Americans driving into the country to buy temporary Mexican car insurance for the duration of their stay. This is true of all nations in Central America as well. There’s an exception to this rule too, however: Many American auto insurance providers offer people living in border states “Mexican auto endorsement” coverage, which is quite limited and does not offer third-party liability.

International Car Insurance

Beyond the neighboring countries that Americans can actually drive to, people planning on driving overseas will need to purchase international auto insurance. One well-known American insurance provider that sells international auto insurance is Geico. It works with International Insurance Underwriters, a firm which specializes in international auto insurance and other similar policies.

However, the vast majority of Americans driving abroad, especially those outside of North America, will be doing so in a rented car. In almost all cases insurance is automatically provided by the rental agency. So, for example, if you arrive in Italy and get a car from Hertz or Avis for two weeks, your auto insurance is a part of the entire package. It’s critical to be aware of what this insurance does and does not cover because in many cases, it will be bare-bones and may not cover third-party liability. Choosing to buy their optional car insurance coverage is often a very smart idea.

Save on Rental Insurance

One interesting and potentially money-saving opportunity is, when possible, to drop the car rental agency’s auto insurance policy and substitute one offered by your credit card. American Express, for example, allows its members to use its rental car insurance at a flat rate, which compares favorably with the rates charged by the car rental agency. It does not, however, offer liability protection.

As complicated as all of this may seem, it’s actually fairly straightforward. People bringing their cars overseas will more than likely be moving there. Since they’re not visitors, they’ll need to get car insurance in their new country of residence. People driving into Canada should call their auto insurance agent to verify that their coverage extends north of the border. In most cases it will. Drivers heading south of the border will need to get Mexican auto insurance (and Guatemalan, Honduran, etc., if they’re continuing down into Central America). The great majority of Americans driving abroad will be doing so in rental cars, and these will come with insurance that satisfies that country’s minimum insurance requirements. Buying the rental car company’s supplemental insurance coverage is a smart idea, but may not be necessary if your credit card company offers it too.