All About Foreign Car Insurance
Have you ever wondered about car insurance in other countries? Do most countries require insurance to legally drive? Do any countries approach auto insurance very differently than the US?
We examine some frequently traveled-to countries to see what they require in terms of auto insurance coverage.
Canada requires third-party liability insurance in order to drive legally. This type of policy pays for medical expenses, property damage, and other injuries on behalf of the at-fault driver. At-fault drivers are legally responsible for the costs of accidents, and injured parties may sue to collect damages not covered by an insurance policy.
Accident Benefits Coverage
Accident benefits coverage pays the insured’s medical care, lost-income reimbursement, funeral expenses, and survivor benefits, regardless of who caused the accident. This coverage is mandatory in all but two Canadian provinces.
Collision and Comprehensive Coverage
Canada does not require collision or comprehensive coverage, but they are available for purchase.
In 2019, Mexico made third-party liability insurance a requirement to drive on all federal highways. A driver who cannot show proof of insurance may be fined between $85-170.
The European Union
Third-Party Liability Insurance
European Union countries require that a driver have third-party liability insurance prior to registering a car. This insurance covers the other party’s property damage and injuries due to an at-fault accident in any EU country.
First-Party Liability Insurance
First-party liability insurance is optional and covers the at-fault driver’s medical bills and property damage. It also covers property damage due to theft or vandalism, as well as attorney fees.
Traffic Compulsory Insurance
In China, insurance follows the car rather than the driver. All auto-owners are required to have traffic compulsory insurance. This is a liability policy that covers deaths, injuries, and property damage of the not-at-fault party. Required minimums are low and may not cover the full claim of even a minor accident, so many drivers purchase additional third-party liability policies that increase this coverage.
Driver’s Insurance, Passenger Insurance, Vehicle Damage, and Theft Insurance
Other car insurance options are available, to cover an at-fault driver (called driver’s insurance) and their passengers (called passenger insurance and sold per vehicle seat), replace their damaged property (vehicle damage insurance), and guard against theft (theft insurance).
Quota-free insurance pays your other insurance deductibles. In the case of an at-fault accident, the vehicle-owner must pay 20-percent of the total cost of an accident before insurance kicks in. Quota-free insurance is an additional policy that will cover that 20-percent, so at-fault drivers can avoid out-of-pocket expenses.
Por Ror Bor
Thailand requires drivers to have third-party liability insurance (known as por ror bor), which covers the other party’s medical or funeral expenses in an at-fault accident. The requirement is so minimal that many Thai drivers choose private insurance instead. Private insurance policies are similar to American policies, in that you can tailor them to meet your needs.
One Thai company offers a unique solution to auto insurance—a policy that only charges you for the time you spend driving your car. The company uses a SIM-embedded tracking device to know when your engine is running. Your “insurance meter” starts running as well, and switches off when your engine shuts off.
Read more about Thai auto insurance.
In Japan, liability insurance is mandatory, and the at-fault driver is legally responsible for any damages that exceed their insurance coverage. A vehicle must pass a 60-point safety inspection to qualify for this mandatory insurance, ensuring that every car on the road is actually roadworthy. They repeat this inspection every two years to coincide with the vehicle’s insurance renewal.
Japan does not require voluntary insurance coverage, which is similar to comprehensive coverage in the US. It includes collision and uninsured motorist coverage, as well as rental reimbursement and roadside assistance.
In order to drive legally in Australia, drivers must carry liability insurance. Comprehensive insurance is voluntary, although if a car is financed, it may be required by the lender.
Road Accident Fund
In South Africa, the Road Accident Fund (RAF) is a state insurer funded by a fuel tax. It pays injured parties or the survivors of deceased parties following a road accident. Involved drivers are assigned a percentage of responsibility for the accident. RAF pays the amount of their bodily injury claims, minus the percentage of responsibility they bear. RAF does not repair or replace damaged property.
Additional insurance isn’t legally required in South Africa, and only about 30 percent of drivers carry it. A lender may require a driver to purchase comprehensive coverage for a financed vehicle. Third-party liability insurance can also be purchased to protect at-fault drivers, since injured parties may sue to collect damages.
In Louisiana, auto insurance follows the car. If you lend your car to a friend, your insurance policy covers them.
Louisiana law requires all drivers to carry liability insurance that covers $15,000 in bodily injury per person and $30,000 per accident, in addition to $25,000 in property damage. Penalties for driving without insurance include having your car impounded and $500-1,000 in fines.
No Pay, No Play
Louisiana also has a “No Pay, No Play” law, which prevents uninsured drivers from collecting the first $25,000 in property damage and $15,000 in personal injury, even if the other driver was at fault.