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back to index backEUROtalk September,  2005

Drive Without Borders: Finding International Automobile Insurance Protection

It was a simple plan. Your international transferee in Spain wanted to spend a weekend in Dusseldorf. He left his apartment in Madrid, had an uneventful drive through France and upon crossing the border into Germany, decided to test his driving skills on the famed Autobahn. That's when he got into an automobile accident with a Danish tourist. Your transferee learns that unfortunately, his auto policy isn't quite as international as he thought. He contacts his local automobile insurance provider and finds out that his policy only covers him while he is driving within the borders of Spain, but not in other countries.

For many international transferees who do not wish to be confined to using only taxis and public transportation in a foreign country, driving is an appealing option. Driving presents additional concerns that should be adequately addressed to ensure that the international transferee is properly protected against risk.

First of all, international transferees should decide if they will rent an automobile or if they will drive an automobile they have already purchased or leased, either from their home country or in their country of residence. Transferees driving a company-owned automobile should check with their company to determine if they are permitted to drive the car outside their posted country's borders. Fully understanding the corporate policy on their automobiles will save the transferee from confusion later.

Regardless of rental or purchase, it is important to secure the appropriate amount of automobile insurance coverage. Insurance requirements will vary from country to country. For example, according to the U.S. State Department's website, an international transferee must carry a minimum of $200,000 in liability insurance in Canada.

Meanwhile, Mexico requires an international transferee to post a bond as much as 50% of the car's value if the car does not have any theft, third party liability, and comprehensive insurance.

Some countries require drivers to purchase primary liability insurance with a local insurance company. However, in many cases, this is little more than simply a vehicle registration fee, and does not actually provide coverage at the time of loss. In such instances, it is recommended that drivers purchase excess liability coverage with a trusted international automobile insurance provider to help ensure that the driver will have adequate protection in the unfortunate event of an accident.

When investigating automobile coverages, international transferees should seek an international insurance provider that offers physical damage (comprehensive and collision), primary automobile liability (third party) and excess liability coverage. They should seek an insurance plan that would provide worldwide protection, and avoid coverage that is confined to only within country borders. Thus, if an international transferee travels from country to country, he or she would be covered regardless of where they go.

Additional endorsements to a policy that international transferees might wish to consider are reimbursement of automobile rental insurance expenses and disablement towing coverage. International transferees should investigate their international insurance options, and find a carrier that will reimburse them for the cost of a rental car in the event of an unforeseen accident.

The amount of reimbursement per day and the length of coverage will vary, so transferees should consider the level of protection with which they feel comfortable. Disablement towing coverage will provide for towing in the event the international transferee's automobile is rendered inoperative.

Lastly, it is recommended that an international transferee secure an international driving permit (IDP), which is recognized by over 150 countries worldwide. IDP's are not valid in an international transferee's country of residence, but are used when he or she is driving in foreign countries. Before your transferee leaves for his or her international assignment, advise the assignee to consider obtaining an IDP, particularly if he or she intends to drive while in a foreign country. In addition, check on the country's driving rules, such as minimum and maximum driving ages, road permits, use of safety belts, etc., prior to travel.

Whether international transferees rent or purchase an automobile while on assignment, they should secure the appropriate level of insurance protection. The general rule of thumb when seeking coverage is to secure the same amount of automobile insurance protection that the international transferee normally has at home. International transferees opting to rent an automobile can typically obtain automobile insurance protection from the car rental company. However, for international transferees who opt to drive an owned or leased automobile, it is recommended that they consult a trusted international insurance provider to obtain adequate coverage.

Source: Clements International

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Other articles from the same issue (September,  2005).

The road to perfection: Cross-border collaboration on the Mercedes-Benz SLR McLaren
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“Do What It Takes” vs. “Make No Mistakes”
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What Really Ails Europe (and America): The Doubling of the Global Workforce
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COMMENT: Germany needs more than politics as usual
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Emerging markets set the risk standard
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Drive Without Borders: Finding International Automobile Insurance Protection
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Romania: Taxation Blues
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Eastern Europe: Autonomy and Performance of Foreign Subsidiaries in Five Transition Countries
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Japanese Makers Face European Dilemma: To Build Or Not To Build New Generation of High-End Diesels
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Is your business getting “Lost in Translation”?
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