Car Insurance for Expats (2024)

If you’re coming back to the United States after time spent living in a foreign country, you’re naturally going through a process of re-adjusting to many things. And one of those will involve re-acquiring U.S. car insurance.

Here’s what you need to know about the U.S. insurance market at a high level, what to consider upon returning, and how your time spent abroad could affect your rates here.

How does car insurance for expatriates work?

When you return to the U.S., you’ll be allowed to travel the road on a foreign driver’s license or an international driver’s permit for a limited amount of time.^[1] The rules depend on which state you move to.

You can also buy a temporary car insurance policy if you hold a foreign driver’s license. This could be your best option because it lets you drive with coverage in the U.S. for three months. You can also purchase a one-year policy if you hold an international driver’s permit.

Beyond the one-year mark, you must obtain a U.S. driver’s license and seek new coverage. The rate you pay for coverage in the U.S. can be dictated, in part, by your insurance coverage overseas.

If you can provide contact information and documents and demonstrate you had international car insurance, you’re more likely to pay a lower rate to insurance companies in the U.S. This is because you’re showing your insurer your ability to carry insurance, and the company can see how frequently you’ve filed claims.

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Car insurance basics

When you pay a premium for your car insurance policy, you’re buying protection from your insurer. A standard liability policy covers injuries or damage you cause in a car accident up to a certain dollar amount. It won’t cover damage to your personal property.

Every state except New Hampshire has a legal requirement for motorists to carry the state’s minimum amount of car insurance. In New Hampshire, if you don’t want insurance, you must be able to demonstrate your ability to meet your expected liability requirements out of pocket instead.

Some states may require additional coverage, such as personal injury protection or uninsured/underinsured motorist coverage. And if you’ve taken out a car loan or lease, the lender might require you to buy comprehensive and collision coverages to insure your car and protect against a total loss.

Here are some of the most important car insurance terms to know:

• Claim: This is what you file with your insurer after you’ve been in an accident or in case of theft. If your claim is approved, you may receive funds from your insurer to help cover the cost. But if your insurer denies your claim or you don’t have enough coverage, you could be financially responsible for some or all costs.

• Declarations page: A car insurance declaration page summarizes your auto insurance policy, including your specific coverage details, term length, policy number, and information about your car.

• Deductible: Before your insurance kicks in, you’ll have to pay a set amount out of pocket. This is known as a deductible. If you opt for a higher deductible, you may be able to save on your premium.

• Discounts: Many insurers offer savings with a wide range of discounts, like safe driving, being a good student, or bundling your auto policy with your home insurance.

• Endorsements: Also known as riders, endorsements are changes or additions to your policy. A few examples of car insurance endorsements include roadside assistance and rental car reimbursement.

• Exclusions: These are circumstances or perils your policy won’t cover, and they’re outlined in a section of your policy. For example, if you have a liability-only policy, your insurance won’t cover you for glass damage, vandalism, or accidents with animals.

• Policy: Also known as an insurance plan, a policy is a contract between you and an insurance company that helps protect you financially if you’re in an accident or your car is damaged or stolen. Policies typically last for six months or one year.

• Premium: This is what you pay for your insurance policy, sometimes referred to as an insurance rate. You typically pay your premium on a monthly basis, but some insurers will allow you to pay for the whole period up front (often for a small discount).

Types of car insurance

Whether you’ve been away from the U.S. car insurance market for an extended period of time or you’re looking as a first-time customer, here’s a rundown of some common types of car insurance coverage so you can find the best value for you:

• 

  Bodily injury liability coverage

  Bodily injury liability covers medical expenses for injuries you cause to the other driver and passengers involved in an accident.

• 

  Property damage liability coverage

  Property damage liability helps pay for damage you cause to someone else’s property or vehicle.

• 

  Personal injury protection (PIP) coverage

  PIP covers medical expenses for your and your passengers’ injuries suffered in an accident, regardless of who caused it. PIP is sometimes called “no-fault coverage.”

• 

  Uninsured/underinsured motorist coverage

  Uninsured motorist coverage pays for your medical bills and repair bills if you’re involved in an accident caused by a motorist without car insurance. Underinsured motorist coverage kicks in when a driver who caused an accident doesn’t have enough coverage to pay for your medical bills and repair bills.

• 

  Collision coverage

  No matter who’s at fault, collision coverage pays repair bills when your car is damaged in a crash. If you financed your car, the lender might require you to have collision coverage.

• 

  Comprehensive coverage

  Comprehensive coverage pays to repair or replace your car when it’s been damaged in an incident other than a collision. For instance, it typically covers damage caused by hail or a fallen tree limb. Lenders often require you to have comprehensive coverage.

How much car insurance coverage you need

Every state except New Hampshire requires drivers to carry a minimum amount of liability-only coverage. While this type of insurance covers injury to another person and damage to their car when you cause an accident, it doesn’t cover your medical bills or damage to your vehicle.

Full coverage, on the other hand, is a collection of different types of insurance, including liability insurance, collision coverage, and comprehensive coverage. In general, most drivers choose full-coverage insurance. The National Association of Insurance Commissioners (NAIC) estimates that 75% of insured drivers purchase collision insurance, while 79% buy comprehensive coverage.

A serious accident can lead to property damage, medical issues, or more. When deciding on how much insurance you need, make sure you have enough coverage to protect your finances in a worst-case scenario. Be sure to consider where you live, your assets, how much deductible you can afford, your car’s value, and your healthcare situation.

An insurance agent or your insurance company representative can help you determine the best coverage for your needs.

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Factors that affect your car insurance rates

Your insurance coverage while living abroad isn’t the only thing that can affect your car insurance rates. Insurance companies review several details, including your:

• Driving history: This includes whether you’ve recently caused a car accident or received a traffic ticket, both of which can cause your car insurance price to go up. Some insurers will check your U.S. driving record and records from abroad, while others will consider you a new driver, which could also cause your rates to go up. The same may hold true if you have no driving record at all, as a brand-new driver has no behind-the-wheel experience, and insurers may see them as higher-risk.

• Type of car: The kind of car you own can affect how much you pay for car insurance. For instance, your premium might be higher if you drive a car that’s prone to theft or that costs a lot to repair.^[2]

• Age: Younger drivers with less on-the-road experience usually pay more for coverage than older drivers with more experience. That’s largely because drivers younger than 25 tend to get into more accidents than older drivers do. Senior drivers also generally pay higher rates because of reduced reflexes and the increased risk of serious injury in the event of an accident.

• Location: If you live in an area where car thefts, vandalism, or accidents are more common, you might pay a higher price for car insurance.

• Lapses in coverage: Going without coverage can result in higher car insurance rates because an insurer might see you as a high-risk driver.^[3]

• Credit history: Most states allow insurers to use your credit history when determining your quote. Insurers see drivers with higher credit scores as less likely to file an insurance claim, so you can expect to pay a lower premium if your credit score is higher.

Expat car insurance FAQs