Reader Question: Should I Purchase Car Insurance If I’m Temporarily Moving to U.S.?
As Americans, we are free to drive our properly insurance vehicle from state to state without having to worry about whether or not we will have coverage across state lines. But what happens if you want to drive your vehicle north of the boarder? Or what if you are our one of our friendly Canadian neighbors who wants to bring your Canadian-insured vehicle into the U.S.?
I recently received an email from a Canadian reader inquiring about what type of car insurance coverage she would need in the States, as she planning on splitting time between her home in Canada and a separate residence in the U.S. This got me thinking — do insurance companies provide coverage for drivers hoping to travel across the border?
The answer is that while insurance rules and laws vary from country to country and state to state, in most cases, your insurance company will in fact cover you across the border, regardless of which side you are coming from. However, this mostly depends on your specific insurance provider. The tricky part in the equation comes from determining whether or not the amount of coverage you have selected will be adequate in the state, province, or country where you will be driving. Other factors like the length of your stay and currency exchange rates must also be taken into account as well.
If a Canadian driver plans on using the same car in both countries (for anything longer than a brief, week-long vacation), he or she will need to purchase Canadian car insurance policy regardless. If the driver plans on taking the vehicle across the border regularly, he or she may even want to consider an international car insurance policy. A policy like this allows drivers to legally operate their vehicles in bordering countries, while also providing adequate coverage.
However, if you are a Canadian resident splitting time between U.S. and Canada, and you plan on having a dedicated vehicle in the U.S., it may be more cost effective to simply purchase a separate policy in the U.S. In the instance of our reader, the average insurance policy in Canada by province is substantially higher than the average policy in a state like California. In fact, the California rate for car insurance is about $754 a year, while in Canada, only Newfoundland & Labrador and Prince Edward Island have lower average premiums, at $749 and $649 a year respectively. This means if the driver will be spending most of his or her time exclusively driving in the U.S., it may be more cost effective to opt for short-term car insurance in America rather than staying with Canadian insurance.
Additionally, U.S. drivers have much more control over their car insurance premiums. This is because there are more companies that allow drivers to compare quotes from different providers, as well as select the types of coverage they can select.
For example, in Canada, the provincial automobile insurance law requires drivers to insure their vehicles for a minimum of $200,000 for Third Party Liability Coverage and Basic Accident Benefits Coverage. Drivers in Nova Scotia are required to carry $500,000 in coverage, while Québec has its own unique insurance laws. While the figure may seem staggering for U.S. drivers where minimums are significantly lower, TD Insurance states that it is common for Canadian drivers to extend their liability coverage to $1,000,000. Additionally, auto insurance is controlled by the government in Manitoba and Saskatchewan, offering buyers no real shopping ability.
So, if you are a Canadian planning a trip to the U.S., you will want to contact your insurance company first. If your insurance does provide coverage in the U.S., you will more than likely have plenty of liability coverage since Canadian insurance requires much higher coverage than U.S. states. However, it is still worth discussing with your insurance agent before making the trip.
If you are a U.S. driver planning a trip to Canada, most insurance companies provide coverage in Canada. However, since Canadian coverage is typically much higher than the required minimum in most U.S. states, you may want to add additional coverage to policy before making the trip. GEICO provides this helpful guide that can be useful for any U.S. driver hoping to take their car north of the border.