Are American auto insurance companies different from foreign ones?

Foreign auto insurance companies operate under different insurance laws than American auto insurers. Normally, your U.S. auto insurer will not cover your travels abroad.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Nov 2, 2021

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Things to Remember...

  • Many local insurers offer auto insurance policies that include international plans
  • Auto insurance requirements vary according to the country in which you will be driving
  • In some countries, private settlements are more often than having insurance companies settle claims

Finding auto insurance that will provide protection to vehicles on an international level can be a challenge.

So what does a business that has international operations do to cover autos used by employees who have to travel across borders on a regular basis to conduct business?

International insurance provides cover for the destruction caused to a car or any people injured according to the conditions agreed upon outside the home country.

To get affordable rates now, use our FREE auto insurance comparison tool by entering your ZIP code.

International Insurance

International car insurance is not very common, but one does have some options to select from.

Once someone has the intention to buy, he must ask himself how much international auto insurance will cost.

While searching for international insurance, some important things that should be kept in mind include:

  • The type and amount of coverage
  • The countries where one needs to be covered
  • How many vehicles need to be covered

Obviously, the price will vary greatly depending on the answers to these questions.

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International Requirements


Not every country of the world has the same auto insurance laws.

For example, in many states of Mexico and many countries of the Middle and Far East, liability auto insurance is not even obligated by law.

Additionally, standard Mexican insurance is not even given to cars with foreign plates. Such vehicles will have to get a tourist policy.

Some foreign insurance companies will require a U.S. address, while others will not.

In Mexican law, there is no room for things like an allowance for “pain and suffering”, so there is no need to carry a large liability insurance amount.

If you are traveling and renting a car and have questions about insurance, consult the respective laws and regulations and then assess the options available for your trip that make the most sense.

Similarities Between Home and Abroad


What is similar among all foreign and local insurance companies is the fact that there will be some system in place where an agent will visit the scene of the accident, carry out a survey, collect evidence and then file his report.

Based on the report, the insurance company will determine who is at fault and how much to pay or whether not to pay.

In many countries, private settlements are not uncommon. In cases where it is a matter of a simple fender bender, it is the norm not to involve the insurance companies at all and just reach a settlement quietly.

The general procedure is that the person at fault pays the agreed amount and the business is done.

The problem here is that the insurance company, whether foreign or local, will not pay for any repairs of the damage caused by the accident.


How Insurance Rates Are Determined

All auto insurance companies, domestic and foreign, are regulated to some extent by their home governments. In addition, foreign companies have to abide by the laws of the host country or state in which they operate.

No government, however, sets the rates that a company can charge.

All auto insurance companies, local or foreign, are prohibited from considering certain factors like race and religion when determining rates.

Other factors, like age, gender or marital status, are factored in by auto insurance companies when determining premiums for individuals.

Different countries restrict different information that insurance companies are allowed to use when determining rates meaning the same driver may have to pay more in premiums in one country as compared to another for the exact same policy.

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Companies Weigh Risks to Determine Your Rates


Auto insurance companies employ complex software where each risk factor carrying different weight is plugged into the equations of the software to spin out the final premium figure for an individual.

The reason different auto insurance companies quote different premium costs for the same individual is based on a couple of factors. Different factors are assigned different weight by the companies, which gives rise to different quotes.

Another major factor that produces the difference in prices is the experience each company has in a given area.

If company A has not had to pay out too much money in area X, while auto insurance company B has had a bad year in the same area and ended up having to pay out large amounts in the same area, then company B will quote higher premiums for people seeking auto insurance in Area X than company A.

When seeking the most cost effective auto insurance company, it is important to shop around.

Let an online auto insurance comparison give you free quotes to compare so you can make an informed decision. Enter your ZIP code into our FREE auto insurance comparison tool to compare rates now!

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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