a while male handing over a set of car keys

Car Rental Insurance & Tips When Traveling Abroad

Written by Monica Grimes of John B. Wright

I’ve received many requests and questions about car rental insurance and auto insurance abroad. While I love speaking with customers and prospects about it, I also wanted to make this information available online as a resource for anyone who is interested.

Do you need car rental insurance, or not? Read this article to find out.

Common Questions About Car Rental Insurance

Here are some of the top questions we receive at John B. Wright:

  • How do you explain to a client the need or not for them buying car rental insurance?
  • What coverage is afforded from their existing PL policy?
  • Why should they buy coverage and what type of coverage is usually afforded from a rental company?
  • When does a clients PAP policy cover for a temporary substitute?

Here are my answers, in a nutshell:

I always explain to the insured that if they are involved in a car accident, their auto policy will cover liability for them if they are sued in an accident as well as comprehensive/collision if their policy provides those coverages.

However, if they do have an accident, they will have to pay their deductible directly to the rental car company at the time of the claim. They also might incur some charges for loss of use because the rental car carrier can’t rent the car until it’s fixed. With that being said, I always recommend they take out the damage waiver coverage offered by the rental car companies. This way, if there is an accident, they are not responsible for anything & don’t have to put in a claim thru their insurance company for damage to the rental car.

If they are traveling out of the country, then I tell them to either purchase the liability coverage OR check if their credit card company will provide them coverage because they are not in the US, Canada, or Mexico. I always use the example that I purchased all the available coverages when I traveled to Aruba because it was out of the country & my policy didn’t extend out of the country.

I always advise them to check with the rental car company to see how much each coverage is per day because the price could vary between different companies as well.

Auto Insurance Abroad

Auto insurance rules and regulations can differ greatly across the world. Do not assume that your domestic policy will cover you in other countries.

Here’s how local laws might affect your coverage when traveling internationally in North America or Europe.

Crossing the Border: Insurance in Mexico

Mexico has no federal laws that require motorists to have liability insurance (though some jurisdictions may have their own rules). It’s estimated that more than half of all vehicles on the road in Mexico are uninsured. There, you are only required to demonstrate proof of your ability to pay for damages caused by negligence.

While it may not be required, it’s strongly recommended that you have insurance when driving in Mexico. Serious accidents there can land you in custody, during which officials will determine fault and confirm your ability to pay for damages. As soon as it’s confirmed that you have valid insurance coverage, you’ll be free to go.

Crossing the Border: Insurance in Canada

Canada’s insurance laws align more closely with those in the U.S. All drivers must have liability insurance in the minimum amount of $200,000 (except in Quebec, where just $50,000 is required). A U.S. driver’s license is accepted in Canada, and most (but not all) U.S. insurance policies will cover you while visiting our neighbors to the north.

Crossing the Pond: Insurance in Europe

Your domestic insurance policy will most likely will not cover you in Europe. To find out if it does, you should contact your agent or read through your policy to identify any exclusions for driving outside of the country.

Inside the European Union, every country abides by the First Directive of Motor Insurance. Like when you travel between states in the U.S., coverage you buy in one E.U. country will also apply in the others.

In countries outside the European Union, you should check with your car rental company about local regulations. Regulations may vary, and you want to make sure you are protected with at least the minimum required coverage.

In Case of an Auto Accident

If you are ever involved in an accident, whether abroad or on American soil, the best thing to do is call the claim number on the back of your insurance card. They will walk you through the steps of the claim process, and clarify any questions you have about what to do.

The best way to ensure your coverage matches your needs is to speak with a knowledgeable agent. Contact us to get started.