Insuring a Car in a Foreign Country

Insuring your car is completely necessary. Not only is it illegal not to have car insurance in almost every country, it protects you from some of the most expensive mishaps you can experience - those to do with your vehicle!

Click where you see lightbulb image for more information

Is car insurance mandatory?

Yes, in almost every country. If you’re in a country where it is not mandatory, it’s probably not the kind of place you want to be without insurance anyway!

What are premiums?

Premiums are the amount of money you will have to pay monthly or yearly to keep up your insurance policy. They are calculated by a number of factors, such as the value of the car and the security of where you keep it.

What is excess?

Excess is the amount of money you will have to ‘pay’ towards an insurance claim. For instance, if you have an excess of €100 and you make a claim for €500, you will only receive €400 from your insurer. Generally, the higher the excess the lower the premiums.

Where should you buy car insurance?

When it comes to insurance, cheapest is seldom best. It’s usually worth purchasing a more comprehensive vehicle insurance policy – car accidents are alarmingly common, very expensive and very stressful. The last thing you need is a month’s bickering with the insurance company over whether you were covered.

Saving €50 on premiums may seem like a bargain – but if your protection is significantly reduced, or the company is difficult to deal with, it simply isn’t worth it.

The internet is your friend! Use it to compare prices and policies (price comparison websites abound in almost every country). Also make sure you do a Google search on the company you’re considering buying from to highlight any issues other customers may have had. You might be shocked at the results…

Also ask around your new neighbours, or any friends you have in the country. Ask on online forums as well.

What should car insurance cover?

If you can afford it, it is almost always worth purchasing fully comprehensive car insurance (and even if you think you can’t afford it, do check – weirdly, the lowest level of cover sometimes isn’t the cheapest). A good, comprehensive car insurance policy should cover:

  • Damage to other vehicles/property
  • Injury to other people
  • Fire damage to your car
  • The theft of your car
  • Vandalism of your car
  • Repairs after a road accident or accidental damage
  • The loss or damage of any personal belongings kept in the car
  • Loss of car keys
  • ‘Courtesy’ car (a temporary replacement car if yours is being repaired)
  • Car rescue (removing the vehicle from the scene of an accident)

There are a number of extras that can make your car insurance even more secure, such as hotel expenses (if you can’t continue your journey due to a car accident) or breakdown cover. The Money Advice Service in the UK provides a good list of these.

Important things to look out for

Always make sure:

You are dealing with a reliable company

Some see paying out as an optional extra or a reward for completing their administrative obstacle course. It is well worth paying a little extra to deal with a company that has a culture of prompt payment.

You read the policy document

This is boring, and takes a while, but you simply must do it. Sorry.

You comply, strictly, with any conditions attached to the policy

If you don’t, they are likely to refuse payment.

Keeping premiums down

There are a number of things you can do to help reduce car insurance premiums.

First, look at the car you want to buy or hire. Insurers group cars into different categories by factors such as engine size and availability of parts.

Second, think about excess. A larger excess means a lower premium. Be careful, though, that you will be able to pay an excess without financial strain.

Third, increase security. Make sure your car has a good alarm or immobiliser. If possible, keep it locked in a garage or (short term) in a car-park with security.

No-claims bonuses

Many insurance companies will lower your premiums for every year you go without claiming on your insurance.

Some companies will, for an extra premium, allow you to protect your no-claims bonus so that, if you have an accident and make a claim, you will not lose your entire bonus – which is what would happen if you did not take out the protection. So, for example, if you pay the extra premium and you make a claim you may only lose one year of your no-claims bonus.

Who will be covered by the policy?

By default, the only person who will be entitled to drive the vehicle is the person who took out the insurance policy.

However, you can usually select other options:

  • You and your spouse
  • You and your spouse and any children who live with you
  • You and a named driver or drivers
  • Any driver (much more expensive)

Insuring your current car in a foreign country

If you want to bring your current car to another country for a long period of time (see our individual country guides to help you work out if this is a good idea), you will need to insure it – usually with a local company – before registering it.

Keeping your current policy

You will only be able to keep your current car insurance policy in a foreign country if your insurance company has an office there or is authorised to provide cover there.

Even then, it is possible that you will need a modified policy to stay in line with the laws in your new country.

Keeping your current car at home

If you are leaving your home country with the intention of returning – for example, if you are going abroad to work for a year – be aware that you are likely to need a valid insurance policy on that car even when you are away. Talk to your insurance company for more details.

Insuring a car abroad – short term

Insuring your own car in a foreign country

This is generally more complicated than hiring a car abroad.

The specifics will depend greatly on your home country and the country to which you are travelling – see our individual country guides for information on your countries of interest.

Your normal insurance policy is likely to cover the minimum compulsory insurance in the country you are travelling to. Some countries, however, require you to purchase local car insurance.

To receive more than the minimum mandatory insurance, you will usually either have to take out a separate short-term policy (at home or abroad) or speak to your current insurer about paying extra on your current policy.

What to look out for

If you are going to be relying on your current car insurance policy, be sure to read the policy carefully before making a trip. Some insurance companies expect you to tell them if you are going abroad – or if you are going abroad for more than a few days.

Find out how many days abroad per year you are covered for.

Look out also for mention of continuous cover. Whilst your policy may cover you for, say, 30 days abroad during any one year, it may not cover you for all those days consecutively. If your trip is going to be longer than the period under continuous cover, you will need to speak to your insurance company about extending the policy. The same applies if your trip gets unexpectedly extended while you are abroad.

International Motor Insurance Cards

International motor insurance cards are proof that you are covered by at least third party insurancelightbulb image - hover here for more information on this subject. They are not strictly necessary in every country, but they are well worth having – especially if your insurance policy is only written in your own language.

There are quite a few different kinds of these cards, each covering a different group of countries. For instance, a ‘Green Card’ is recognised in all the countries in Europe.

Driverabroad.com has a good list of the various ‘colours’ of International Motor Insurance Cards and the countries they cover.

Some countries do not recognise International Motor Insurance Cards.

Insuring a hire car in a foreign country

You will need insurance if you are using a hire car abroad.

Should you buy car insurance from the hire company?

Buying car hire insurance from the hire company is not always the best way to get a good deal.

Shop around – see if you can buy an equally good policy from a third party insurance company for less money.

Pre-authorisation and excess insurance

If you are hiring a car abroad, you are very likely to have to give the insurance company pre-authorisation to deduct an amount of money (usually the excess on your insurance policy) from your credit or debit card.

The car hire company may deduct the full amount of excess (often hundreds of euros, pounds or dollars) for superficial damage – say, a tiny scratch on the paintwork or a small dent from someone opening their car door into yours.

For this reason, it is very sensible to get excess insurance. The car hire company can still deduct the full excess amount from your card but you will be reimbursed.

Excess insurance is usually a lot cheaper from a third party than from the car hire company.

Things to look out for

It is a good idea to take photographs of your hire car from a number of angles when you first take possession of it. This is to record any pre-existing damage.

If you are going to be taking the hire car into countries other than the one it is hired in, check both the law in those countries (in case they require a higher level of insurance) and your policy (to check you are still covered in another country).

Making a claim

You and the insurer both hate it when this happens!

Some companies are much better than others when it comes to dealing with (and paying out on) claims. Do a Google search on the company you are thinking of using – “XXX problems claims”. You will probably be surprised. This could be the most important step in the whole process of obtaining insurance.

Study your policy carefully. Look at exactly what documents they need in order to make a claim and then make sure you have them to hand at home, in your car, digitally on your iPhone and in your handbag.

Leave a Reply