Understanding In-State Auto Insurance: What's The Deal?

In the U.S., auto insurance laws vary from state to state, and it's important to understand the requirements and limitations of your policy, especially when travelling or relocating to another state. Generally, your auto insurance will cover you for temporary trips out of state, but for longer stays or relocations, you may need to update your policy to meet the requirements of your new state. In most states, you are required to purchase auto insurance, and in some, you must have specific types of coverage, like personal injury protection (PIP) in no-fault states.

In-state auto insurance is valid in other US states

When it comes to Canada, most insurance companies do cover you if you drive north of the border.

It's worth noting that your insurance premium is calculated, in part, based on where your car is garaged, meaning where it spends most of its time. While your in-state auto insurance is valid in other US states, if you're permanently relocating to another state, you'll need to update your insurance policy with your new address.

It covers repairs, replacements, and medical bills

Auto insurance provides financial protection in the event of a car accident, theft, or other incidents beyond your control. It covers repairs, replacements, and medical bills, depending on the type of coverage you have. Here's a more detailed look at how auto insurance can help with these expenses:

Repairs and Replacements:

• Liability Coverage: This is required in most states and covers the cost of repairing or replacing the other driver's vehicle or property if you are at fault in an accident. It also covers medical expenses for the other driver and their passengers.
• Collision Coverage: This covers the cost of repairing or replacing your vehicle if it collides with another vehicle, object, or overturns. It also covers damage caused by potholes.
• Comprehensive Coverage: This covers damage to your vehicle caused by events beyond your control, such as fire, theft, vandalism, natural disasters, and falling objects. It also includes coverage for cracked or shattered windshields.
• Uninsured/Underinsured Motorist Coverage: This protects you if you are hit by a driver who doesn't have insurance or doesn't have enough insurance to cover the repairs or replacement of your vehicle.

Medical Bills:

• Medical Payments Coverage: This covers the medical expenses of the driver and passengers in your vehicle, regardless of who is at fault in the accident.
• Personal Injury Protection (PIP): PIP is a broader coverage that includes medical payments and also covers lost wages, funeral costs, and the cost of replacing services normally performed by someone injured in an accident.
• Uninsured/Underinsured Motorist Coverage: In addition to covering vehicle repairs or replacement, this coverage also pays for injuries caused by uninsured or underinsured drivers.

It's important to note that auto insurance typically doesn't cover maintenance, general wear and tear, or mechanical failures. Additionally, it's recommended to purchase more than the state-required minimum liability insurance to adequately protect your assets in the event of a serious accident.

It's illegal to have in-state insurance in a state you don't live in

In the United States, auto insurance is essential protection that covers you if you're at fault in a car accident. It can also pay for damage to your own vehicle, injuries to yourself or your passengers, and repairs if your car is vandalized or damaged by hail or other extreme weather.

Your car insurance policy is specific to you and your current address. Your insurance premium is calculated, in part, based on where your car is garaged, or where it spends most of its time. In general, you need to buy car insurance in the state where you live. So, if you move to a new state, you'll need to update your insurance policy with your new address.

It is typically illegal to live in one state and register your car in another. If your insurance company finds out, they will likely cancel your coverage and deny any pending claims. While your car insurance coverage extends across the U.S., meaning you can drive anywhere in the country and know you're covered, this does not mean your insurance coverage is limited to the state you live in. Your car insurance will cover you in every state, no matter where in the U.S. you drive.

However, this does not apply if you have permanently moved to a different state or are driving across the border to Mexico or Canada. In these cases, you will need to update your car insurance company or purchase a new, temporary policy to cover you in the new location.

You may need a new policy for driving abroad

In-state auto insurance refers to the auto insurance policy that covers you when driving in different states within your country. In the US, for example, your car insurance will cover you in every state, no matter where you drive. However, if you're driving across the border into another country, you'll likely need a new, temporary auto insurance policy.

Driving Abroad:

When driving abroad, it's important to understand the requirements and regulations of the country or countries you'll be visiting. Here are some key points to consider:

Check Your Current Policy:

Before assuming you need a new policy, carefully review your current auto insurance documents or contact your insurance provider directly to see if you're already covered for driving abroad. Some insurance policies may offer basic third-party cover for driving in certain countries, but it's important to know the details, including the level and period of cover.

Understand International Insurance Requirements:

Different countries have different insurance requirements. For example, if you're driving in Europe, you may need a "Green Card," which is proof of the minimum compulsory level of insurance for the country you're visiting. Similarly, some countries may require an International Driving Permit (IDP) in addition to your domestic driving licence. Check the requirements for each country you plan to visit.

Update Your Insurance:

If your current policy does not cover you for driving abroad, you will need to update your insurance or purchase a new, temporary policy. Contact your insurance provider to discuss your options and any associated fees or charges. They may offer an add-on to your current policy or a separate, temporary policy for driving abroad.

Understand the Coverage Details:

When purchasing a new policy for driving abroad, be sure to understand the level of coverage. Many policies will only offer basic third-party cover when abroad, which may not be sufficient for your needs. Check the period of cover as well, as some policies have limits on the number of consecutive days or the total number of days they'll cover you while driving abroad.

Plan Ahead:

Obtaining the necessary documentation for driving abroad can take time. Start the process early by checking with your insurance provider and allowing several weeks for the new policy or documentation to be issued and delivered.

Hiring a Car:

If you're hiring a car abroad, insurance is usually included in the hire costs, but it's important to check the level of cover and the excess amount. You may also need additional documentation, such as a DVLA check code or a VE103 vehicle-on-hire certificate, to hire a car in certain countries.

Additional Considerations:

When driving abroad, there may be other requirements beyond insurance. For example, some countries mandate carrying certain items in your car, such as reflective hazard triangles or a portable breathalyser. Check the specific requirements for each country you'll be visiting, including driving laws, equipment requirements, and documentation needs.

In summary, when planning to drive abroad, carefully review your current auto insurance policy, understand the requirements of your destination country or countries, and update your insurance or obtain a new policy as needed. By planning ahead, you can ensure you have the necessary coverage and documentation for a safe and enjoyable trip.

You can get temporary auto insurance for different states

In-state auto insurance refers to the insurance policy that covers you in the state where you live and your car is garaged. While your car insurance policy is specific to your address, your coverage extends across the U.S., so you can drive to any state and be covered. This is true even when you're driving in a state with different rules about insurance than your own.

However, if you're driving across international borders, you'll need a new, temporary policy to cover you there. For instance, if you're headed to Mexico or Canada in your car, you may need to check with your insurer before crossing the border. Most of the major insurance companies will extend coverage to Canada, but exclude coverage if you are headed to Mexico.

If you're permanently relocating to another state, you'll need to update your insurance policy with your new address. You should start preparing for this as soon as you know when and where you're moving. If your current insurance carrier writes policies in your new state, you can contact them and ask about the cost of a new policy at your updated address. However, it's worth shopping around to find the best coverage for your money in your new home state.

While temporary car insurance isn't available in the U.S., there are a few solutions that can provide coverage for a short amount of time. If you need temporary insurance for a car, your best option is to buy a six-month policy and then cancel when you no longer need it. In most cases, you can pay monthly premiums, and if you prepay a policy, your insurer should refund the balance when you cancel. However, the insurance company may charge you a penalty for cancelling mid-term, known as short-rating.

If you're borrowing a car from a friend or family member, you don't need to worry about temporary insurance. Most standard car insurance policies extend coverage to anyone the owner allows to drive the car (permissive drivers). That means if you're in an accident, the owner's liability coverages will cover those you harm, and the collision coverage would cover damages to their vehicle.

Frequently asked questions