Every year, thousands take to their cars to explore the United States. In the excitement, no one wants to think about getting into an accident. Yet unfortunately, anytime you get on the road, there's a chance you can get into one. If you are going on an extensive road trip, you are going to want to know how to handle your car insurance to ensure a car accident won't ruin your whole trip or finances.
Car Insurance if You Are Taking Your Own Car
There are two things you should know about car insurance when road tripping with your own car: who's covered and what happens if you get into an accident in another state?
In terms of who is covered, car insurance policies allow other people to drive your car (unless they are unlicensed, drunk, or specified as excluded from your policy). 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, if he has one. Any car damage your friend may cause to another driver would most likely be covered by your insurance as well. If anyone is injured, your passengers and the other drivers may want to tap into the medical part of your insurance as well, but may feel more comfortable going through their own health provider first.
When you crash in another state, that state will likely have different auto insurance requirements than your home. For example, if you have car insurance in California, which only requires $15,000/$30,000 of bodily injury liability and $5,000 of property damage liability, and get into an accident in New York, where minimums are about much higher, 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.
Car Insurance if You are Renting a Car
Rental cars come with their own form of insurance. A rental car insurance policy comes in four parts. You do not have to buy all four, but it's recommended you get at least one. The first, and most recommended to buy, is a Loss Damage Waiver (LDW). 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 use that in place of the LDW. Not purchasing the LDW will leave you on the hook for any damage that happens to the car, which can be thousands of dollars depending on the accident. 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. Ultimately, paying for the LDW or using a credit card may be a good way to go. 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.
Next is Supplemental Liability Coverage (SLC) which is mandatory if you do not have car insurance. 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.
You don't really need to have the final two parts - Personal Accident Insurance (PAI) and Personal Effects Coverage (PEC). PAI is redundant if you have PIP and/or health insurance. PEC, which insures items if they are stolen from the rental car, is highly restrictive in what it qualifies for coverage. Ultimately it is not worth the price in most cases.
What if You are Driving to Mexico?
Your American car insurance will no longer be valid when you enter Mexico. You will have to buy Mexican car insurance. Mexico has strict car insurance laws, if you are caught without a valid insurance policy, you can face jail time and other consequences. Fortunately, 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 expense when calculating the cost of a Mexican road trip.