Do You Need Car Insurance for Mexico, Canada or When Traveling Abroad?
U.S.-based auto insurance will not apply when you travel to other countries, except for Canada. Those renting a car in other countries can get insurance through the rental company, through a separate international rental policy, or by paying for the rental with a specific credit card. Those who have shipped their car abroad can protect it with an international car insurance policy. You may or may not need an international driver’s permit in order to operate a vehicle in the country you’re visiting. Insurance requirements often differ from one country to another so check to make sure you are adequately covered before you travel.
If you’re looking to drive outside the U.S., keep reading to see what insurance options you have.
Do You Need An Auto Insurance Policy When Driving Internationally?
You will need an auto insurance policy if you intend to drive while traveling internationally. Most U.S. insurance companies will not provide coverage for you when you're outside of the country, with the exception of Canada.
You can buy auto insurance either through a separate international auto policy, purchasing insurance through a rental car company in the country you’re visiting or by renting the car with a credit card (ask your credit card company first, to be sure you’re covered).
Car Insurance for Mexico
Mexican liability insurance is mandatory for anyone who drives on federal highways. The Mexican government requires proof of financial responsibility in case travelers from outside the country cause an accident while in Mexico.
U.S. auto policies are not recognized by Mexican insurance law, so you’ll need to buy a separate Mexican auto insurance policy with the minimum liability coverage in order to legally drive. There are U.S. insurance agencies that partner with local carriers in Mexico that offer the coverage you need before you go across the border. If your provider does not offer Mexican auto insurance, find a carrier that does because the kiosks near and at the border are extremely expensive.
In the event you rent a car while in Mexico, you can either purchase insurance through the rental car company or use a credit card that has auto coverage when renting cars. You will need to check with your credit card company to verify coverage extends to Mexico. There are also insurance providers who offer international auto insurance specifically for rentals. In order to ensure you’re properly protected, additional coverage can be purchased that extends the limits of your Mexican auto policy, which may not be sufficient on its own.
If you are caught driving without car insurance in Mexico, your vehicle could be impounded and you could be detained until you’re able to provide a suitable way to pay for any financial hardship due to an accident you caused. You may additionally be fined $85 - $170.
Car Insurance for Canada
Your U.S. auto insurance policy will provide the same coverage and limits in Canada as it would at home. Liability coverage is mandatory coverage for anyone to drive on Canadian roads. Drivers will also need to carry accident benefits coverage in most provinces except Newfoundland and Labrador. This coverage pays funeral costs, reimburses lost income, covers medical care and pays survivor benefits. Coverage applies to your personal vehicle and rental vehicle. In order to drive in the Great White North, You will need to have your passport, driver’s license, vehicle registration and proof of insurance.
Don’t forget to obtain a yellow card as proof of insurance, which you can get from your insurance company before you leave for Canada. Without proof of insurance, you could pay a fine and/or your vehicle may be impounded. Your insurance will have a time limit of once you cross over the border as well: A stay that lasts longer than six months without a visitor’s visa will invalidate your car insurance.
Insurance in Other Countries
You can get auto coverage in other countries in a number of ways. For those who are renting, you can:
- Purchase rental car insurance through the rental company
- Purchase a separate international rental policy from a provider such as Allianz Travel
- Get coverage from your credit card if you use that card to pay for the rental car (contact your credit card company for details)
For a traveler who is shipping their vehicle to another country, a separate international car insurance policy can be purchased through providers like Clement or USAA*. Any of these coverage options are acceptable whether you choose to rent a car or ship your personal vehicle to another country.
- European Union - Liability insurance is mandatory for anyone to drive legally in a country within the European Union. Plans should include bodily and property damage coverage. Countries in the European Union include:
- Republic of Cyprus
- Czech Republic
- Car insurance for China - A separate policy is required because your U.S. insurance will not cover you. Traffic compulsory insurance is mandatory for anyone to drive legally in China. It is liability coverage that provides financial protection for deaths, injuries, and property damage for those who aren’t at fault. Limits are typically low, causing many drivers to purchase additional liability coverage.
- Car insurance for Thailand - A separate policy is required as your U.S. insurance will not cover you. Liability insurance, also known as “Por Ror Bor,” is mandatory for anyone to drive. This coverage includes the medical or funeral expenses of the other driver if you’re at fault. You can also get metered insurance from the rental company or through an international policy, which only charges you for the time you spend behind the wheel. Insurance providers will give you an eSIM tracking device so they can note when you’re using your vehicle.
- Car insurance for Japan - A separate policy is required as your U.S. insurance will not cover you. Liability insurance is mandatory for anyone to drive legally in Japan. Vehicles are taken through a 60-point inspection in order to verify the vehicle is safe for the road.
- Car insurance for Australia - A separate policy is required as your U.S. insurance will not cover you. Liability insurance is mandatory for anyone to drive legally in Australia.
- Car insurance for South Africa - A separate policy is required as your U.S. insurance will not cover you. Private insurance policies are not required. Instead, South Africa has what’s called the Road Accident Fund (RAF). It is a state insurer that is financed by a fuel tax. Every time you gas up, part of what you pay goes to this fund. This coverage pays the survivors of deceased parties or injured parties after an accident has occurred and it applies to both permanent residents and people who are visiting. Those involved are assigned a percentage of responsibility. RAF will pay for a bodily injury claim, minus the percentage of responsibility owed by the involved parties. RAF won’t cover repairs or replacements to damaged property.
*Available only for active military, veterans and their families.
What Is International Car Insurance?
International car insurance offers automotive protection to personal vehicles shipped to other countries and rentals depending on the provider. Generally, an international auto insurance policy will provide the following coverage:
- Physical damage to the vehicle due to a vehicle-related accident, extreme weather event, attempted theft, or politically-related violence
- Personal injury coverage if you or a passenger in your vehicle are injured during a car crash
- Uninsured motorist coverage in case you are in an accident with someone who does not have auto insurance
- Bodily injury and property liability coverage, which provides financial protection in case you cause an accident that either physically harms someone or damages their property
Will My Current Insurance Company Cover My International Trip?
Auto insurance from the United States will most likely not cover you while you’re abroad with the exception usually being Canada. Other countries will require you to get a separate policy in order to drive on their roads. Below is a list of providers who offer international car insurance for people who have shipped their personal vehicle abroad and for rentals so you can get the coverage you need when traveling in other countries:
- Allianz Travel
*Available only for active military, veterans and their families.
What About My Credit Cards?
Some credit cards provide auto insurance if you use that card to rent a car but it’s important to call your credit card company to check beforehand to make sure it covers rentals overseas. Coverage provided by your credit card typically includes:
- Collision Coverage - Collision coverage covers repair or replacement for a rental vehicle that was involved in a car accident or that was struck by a foreign object.
- Theft Coverage - Theft coverage covers repair and replacement for stolen vehicles. It does not, however, cover belongings inside the vehicle that were stolen or damaged.
- Towing Coverage - Towing coverage provides reimbursement in case your rental vehicle is severely damaged or stolen and needs to be towed.
Do Rental Car Companies Provide International Car Insurance?
Rental car companies do offer car insurance for the country you’re traveling in, typically in the form of liability coverage, which provides financial protection if you cause an accident that injures someone and/or causes damage to their property. Insurance companies will also offer collision protection sometimes in the form of the customer signing a collision damage waiver (CDW). This isn’t technically insurance so much as it is an agreement that you’re not responsible for covering the cost of repairs if the rental vehicle is damaged. Be warned, however, that CDWs in other countries can be very expensive and may have restrictions. European countries, for example, may exclude the interior, roof, side mirrors, tires, undercarriage and windows of the rental vehicle.
Tips for Renting a Car Abroad
Make Sure You Can Legally Drive
You may be able to use your United States driver’s license in another country. There are, however, many countries that will require you to get an international driver’s permit (IDP), which may also be required when renting a car and in the event you are pulled over by the local authorities. Countries that recognize IDPs include:
*Information is taken from the American Automobile Association.
An IDP basically translates your driver’s license information into several languages. You should get one before you leave the country by going to the American Automobile Association website and filling out the online PDF. Once that’s done, you’ll need to take two original passport pictures, your valid driver’s license and the application fee of $20 to your local American Automobile Association branch. You can also go through a similar process by mail by sending in the above material but with a front and back picture of your driver's license instead of the actual license.
If you are overseas before you get your IDP, you can still obtain one by mailing in the pertinent forms. Bear in mind it will take several weeks for you to receive your permit, so just get it before you leave the country. Also, you will need to be at least 18 years old in order to get an IDP. Make sure you look at the legal minimum and maximum driving ages in the country you’re visiting before you leave.
Make Sure You Have the Right Coverage
Make sure you understand what is required from you, and if your credit card auto insurance isn’t enough, get insurance from the rental car company. The minimum limits for insurance will also differ from one country to another. Buy more than what is required to make sure you’re adequately covered.
Make Sure You’re Comfortable Driving
The rules of the road in other countries will be different from the United States. For this reason, you should familiarize yourself with some of the more common driving laws in the country you intend to visit. This will help you avoid frustration and the possibility of getting a driving citation. For example, European countries will often follow a strict no-turn-on-red rule. In America, unless otherwise stated and there is no oncoming traffic, you can make a right turn at a red light. European countries are also known for driving on the left side of the road instead of the right.
Also, don’t be surprised if a manual transmission is your only rental option depending on the country you’re in. If this is the case, make sure you know how to drive a stick before going on your trip or ensure the rental of an automatic before you go.
Take Precautions When You’re Abroad
Take extra caution when you’re driving in another country. Lock the doors to your car and keep your valuables out of sight when you leave your vehicle. And make sure you’re driving very carefully and not taking needless risks.
If you’re looking to travel abroad and need auto coverage, call 855.214.2291 and a SmartFinancial agent can help find the protection you need.