Going on a Road Trip? Car Insurance Tips for Every Destination

Going on a Road Trip? Car Insurance Tips for Every Destination

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America is a country of roads. Every year thousands take to their cars to explore the United States, but lost in the excitement may be the issue of your car insurance. Anytime you set on the road, there's a chance you can get into an accident. It's crucial that your car insurance is all set and ready to go. Here are a few things you should know before embarking on your trip:

If You are Taking Your Own Car

There are two things you should know about car insurance when road tripping with your own car: whose covered and what if I get into an accident in another state? To address the first, your policy allows other people to drive your car (unless they are unlicensed, drunk, or specified as excluded from your policy). Car insurance follows the car, so if your friend was behind the wheel and he crashes your policy will be the primary source of coverage for everyone involved in the accident-- including the other driver. If your policy is exhausted, then your friend's policy is next to be used. Any car damage your friend may cause another driver would most likely be covered by your property damage liability insurance. In terms of medical damage, your passengers and the other drivers may want to tap into your bodily injury liability, or personal injury protection, but may feel more comfortable going through their own health provider first.

Regarding the second thing to know, different states have varying car insurance minimums. So if you start your trip in Florida, which only requires $10,000 of property damage liability, and $10,000 worth of PIP, and get into an accident in New York, where minimums are about $50,000 greater, you would be very underinsured to cover a New York driver's damages. Luckily, car insurance companies recognize you shouldn't be penalized for having the legal limit in one state, and crashing in another with higher limits. Thus, so long as you were not intoxicated or conducting any other policy disqualifying behavior, your company will bump your limits up to the state's in which you crashed. This also applies if you crash north of the border in Canada. It does not apply in Mexico however, which we talk more about below.

If You are Renting a Car

If you rent a car, you need some sort of rental car insurance. When you rent a car, be it from Enterprise, Hertz, Avis, you have a few options. The first is the one the company offers. Rental companies offer a Loss Damage Waiver (LDW), Supplemental Liability Coverage (SLC), Personal Accident Insurance (PAI) and Personal Effects Coverage (PEC). Of those four, you may only really need the first two. You pay for the LDW, about $9 to $20 per day, which essentially says the rental company will cover any damage that happens to the car. If you have collision insurance on your policy however, you may opt out of the coverage. If you have a credit card as well, you may charge the entire rental to the card, and your card provider will actually cover the LDW at no charge to you. Paying for the LDW or using a credit card may be a good way to go, because if you do get into an accident, you won't have to file a claim with your insurance company, thus risking your rates going up.

The SLC is mandatory if you do not have car insurance. Liability insurance is the minimum amount of insurance you need to legally drive. On the other hand, if you do have car insurance, you do not need to pay for SLC. Although, if you have low limits like the state minimum, going with SLC may be a smart move. SLC will cover you up to a million dollars. PAI you don't really need if you have PIP or health insurance, and PEC is ultimately not worth the price in most cases.

Driving to Mexico

If you drive to Mexico, your American car insurance will no longer be valid and you will have to buy Mexican car insurance. Driving without car insurance in Mexico is highly illegal and can see you thrown in jail for it. Luckily for adventurous Americans, buying Mexican car insurance is actually quite simple. Both Geico and Progressive allow people to purchase a policy on their websites through one of their partners. Plans come in daily, 6-month and year long policies. We found the 6-month is usually the best deal, costing around $300 to $400, so remember to account for that expensive when calculating the cost of your Mexican road trip.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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