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Out-of-State Auto Insurance Coverage

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Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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out of state

You’ve been dreaming of that Hawaiian vacation all year, but in an effort to save some cash, decided to visit your in-laws in a nearby state instead.

With that in mind, the last thing you need to be worrying about is your auto insurance coverage while driving out-of-state.

Well, here’s some good news.  Under most personal auto policies, you’re covered.

But be sure to speak with your independent agent or direct insurer prior to leaving your home state to ensure you’re covered.

How Out-of-State Insurance Coverage Works

Out-of-State insurance coverage typically provides benefits similar to the following:

•    If you’re involved in an accident in a state that has higher mandatory minimum liability limits than you presently carry, or any other financial responsibility law, your policy should automatically increase to that amount when you cross state lines.

•    In addition, if the state you enter has compulsory (mandatory liability car insurance or med-pay) laws, your policy will adjust to those laws, meaning you will have the necessary limits and types of coverage.

Example: If you travel to Colorado, a no-fault state, from a state that doesn’t require that type of coverage, your policy would automatically adjust to cover it.

Out-of-Country Auto Insurance Coverage

More good news.  Along with the 50 states, you’re typically covered while driving in Canada and Puerto Rico as well.

However, Mexico is a different story all together.  Your current personal auto policy probably provides no coverage for a trip into Mexico, although some do.

Your insurer may offer coverage for travel within 25 miles of the Mexican border, for no more than 10 days at a time, sometimes referred to as a “limited Mexico policy.

Just to be on the safe side, it may be a good idea to purchase additional coverage from your insurer for travel into Mexico.

Please note this coverage must be secondary to a primary liability insurance policy purchased from an agent who is licensed to sell Mexican coverage.

The additional coverage on your American policy will provide physical damage coverage, whereas the Mexican liability policy will not.

You can also forget about coverage such as med pay and uninsured motorist coverage on the Mexico policy.

It is recommended that you speak with your insurer or agent prior to driving out of the country to ensure you’re properly covered.

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