Travelling By Car? Check Your Auto Insurance First

Bumping into someone on vacation could be a pleasant experience—unless there are vehicles and injuries involved. In such unhappy circumstances, the right insurance will be vital to you.

Only you and those named on a travel medical insurance policy will be eligible for the cost of hospital care. But there may be some places away from home where others would also be covered by your auto insurance.

Just be sure you have enough insurance to pay for the treatment of those you could injure, plus the cost of their care after the initial treatments and the replacement of their income. All combined, these costs could mount into the millions of dollars.

How far does my car insurance travel?

Canada’s private auto insurers will provide a full range of coverage for your car, you and your passengers, plus those you might possibly injure, whether in Canada or the United States. But that coverage would not apply in Mexico or beyond.

Canadian auto insurers will also include (or sell at an extra cost) coverage for when you drive a temporary substitute vehicle in Canada or the United States, including a rental vehicle. Keep in mind, however, that you could be limited to a certain number of days of coverage. Thirty-day limits are common. There is also likely to be a limit on the weight of the vehicle you decide to rent.

Beyond that, you should be aware that car rental agencies in North America and around the world may only be required to provide a limited amount of liability coverage. So consult your agent or broker for advice, and do some research before renting a vehicle in another country.

Public auto insurers in Manitoba, Saskatchewan, and British Columbia offer much the same coverage for their drivers, with an extra charge for rental cars. Even those who do not own a car may purchase rental car coverage from the government-run insurer in their home province.

The Insurance Corporation of British Columbia will charge $21 a year for its “RoadSide” coverage for rental vehicles, $50 for “RoadSide Plus” coverage, or $78 if you are not one of ICBC’s “RoadStar” discount drivers, says Lisa Shin, who works for an office of The Co-operators Insurance in Vancouver.

Quebec’s personal injury insurance plan will cover policyholders away for up to six months, anywhere in the world, for emergency medical care, rehabilitation, and income replacement. It will also pay pre-set cash awards to compensate for pain and other after-effects such as blindness.

But Quebec residents need coverage from a private insurance company to pay for collision repairs, and to protect themselves financially if they were ever to cause an injury to another person or damage property.

How can I improve my insurance coverage?

If you already insure your own car, you have some huge advantages:

  • You may purchase a family protection option that will protect you if someone without enough coverage injures you in a collision. The coverage limit will be same as the third-party liability coverage you choose to buy, and will be available whether you are driving in Canada, the United States, or––with some insurers––the rest of the world. Consult your agent or broker about the coverage available to you.
  • As an insured car owner in Canada, you are also eligible to purchase what is referred to as an umbrella policy to increase your liability coverage. This will supplement whatever third-party liability coverage you have with your car and home insurance, anywhere in the world. But a homeowner or tenant without a car cannot buy a liability insurance umbrella for vehicle-related incidents.
  • The coverage is relatively inexpensive––in the low hundreds of dollars, not the thousands––because it only applies once you have used up your vehicle or home liability coverage.

What if I don’t own a car?

Anyone who is not already insured should carefully investigate the coverage provided by car rental agencies or sold by an insurer in the country you visit. Read about limitations, dollar amounts, and restrictions that may apply. The rental agency may cover a $1 million liability claim, and leave you to cover the rest if the claim is larger. So you may need a liability policy for a non-owned vehicle. (For an elaboration of the sort of insurance issues you should consider in the United States, read through California’s car rental insurance requirements, watch this video, or take a look at other material on the US Insurance Information Institute website.)

Credit cards may cover collision damage, theft, or loss-of-use charges for a rental car if the cost of renting the vehicle is charged to the card, and if you decline the rental agency’s collision damage coverage. But credit card insurance will not cover you if you are found liable for damage to other property or persons––the really expensive stuff. So read your credit card contract carefully, and choose wisely from the rental agency’s insurance options.

Related: Travel Insurance: How Do I Know My Credit Card Coverage is Enough?

Four-wheel-drive vehicles are available for rent, but check to see if the rental agency’s insurance will apply if you drive on gravel roads, or off of the road. Anywhere you go, in your own car or a rental, there are likely to be exclusions (e.g., when driving while impaired, committing a crime, or driving without the owner’s permission). Coverage for theft may require that you not be careless.

To rent or not to rent

You should compare the cost of taking a taxi, bus, or train with paying for car rental fees and daily insurance costs, including the cost of liability coverage.

Hitchhiking is not recommended because, along with the obvious safety reasons, you will have no idea how much insurance the driver has. Scooters and motorcycles could prove fatal if you don’t know what you are doing. On the ‘bright side,’ the life or disability insurance you buy in Canada will apply around the world.

Some final advice

Be careful about what you say at a crash scene. Do not admit you are at fault. Just leave it to your insurer’s lawyer to defend you in court, and don’t sink his or her case by speaking out of turn.

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