Essential Auto Insurance Tips for Canadian Snowbirds

Before you leave for the season, it’s a good idea to review your coverage to ensure that you have appropriate and sufficient coverage for your vehicles.

Start by reading your auto insurance policy carefully with regards to travel to the U.S., then call your insurance company or broker to inquire about the details.

While many snowbirds don’t take the time to do this, it can help protect you from potentially devastating financial losses and may even save you money.

Here’s what snowbirds need to know about auto insurance.

Notify your auto insurance company

Find out if you need to notify your insurance company before taking your vehicle to the U.S.

While most insurance providers don’t require you to notify them, some may, and some providers will make a note on your file that you drive to the U.S. every year.

Even if your provider doesn’t require you to contact them, it’s a good idea to connect with your broker to review your policy, as they will be able to point out any coverage gaps or limitations you should be aware of and solutions to improve your coverage.

In some cases, they may even be able to identify ways for you to save money on your policy.

How long is your Canadian car insured in the U.S.?

Most auto insurance companies will insure your Canadian car in the U.S. for up to 6 months, but some providers may provide coverage for longer or shorter periods, so be sure to check your insurer’s time limits and restrictions for how long you can have your car outside Canada.

In some cases, you may have to pay an additional premium to have your vehicle insured outside Canada for the length of time you will be away.

Should you increase your liability coverage while in the U.S.?

Your auto insurance policy includes liability coverage, which helps protect you if you injure or kill another person or cause damage to someone else’s property.

The amount of liability coverage you have will vary based on your policy and province of residence. For example, in Ontario as of August 2019, the minimum amount of liability coverage you can have is $200,000, but most policies typically have $1 million - $2 million in liability coverage.

Before taking your car to the U.S. you should check what your liability coverage is. You may also want to consider increasing it for the duration of your trip for two reasons:

1. More Litigation and Higher Damage Awards: The U.S. is a more litigious country than Canada and judgement/settlement amounts are often much higher in the U.S. than in Canada.
   
   Accordingly, you have a higher likelihood of being sued in the U.S. and being found liable for damages that exceed the standard coverage limits provided in your Canadian auto insurance policy.  
   
   Because Canadians come from a no-fault environment, limits may not be high enough to cover damages assessed against you if you have an accident in the U.S.
   
   Some insurers recommend increasing your liability coverage to at least $2 million when spending time in the U.S., while others recommend increasing your coverage even higher. Speak to your broker or insurance company to see what they recommend.
    
2. Foreign Exchange Concerns: The liability limits for your auto insurance policy will be in Canadian dollars, but any damages you are liable for in the United States will be in U.S. dollars.
   
   Because your insurance coverage is in Canadian dollars, the proceeds may not be sufficient to pay for all damages - particularly during periods when the Canadian dollar is weak vs. the U.S. dollar - leaving you vulnerable to being sued for the balance. 
   
   Not only can this be damaging financially, but it will also mean having to hire a lawyer in the U.S. to represent you and possibly returning for court appearances etc. which you will also have to pay for.
   
   Check to see if your policy will cover your legal fees or travel costs in these instances.  

TIP: While you might think that increasing your liability coverage is expensive, it is often surprisingly affordable and can save you a lot of grief down the road.

Check your Loss of Use coverage

Loss of use coverage pays for the cost of a rental vehicle while your car is being repaired if you’re involved in an accident.

If your vehicle is a Canadian model, it could take longer to repair in the U.S., as some parts may not be readily available, so you may need a replacement vehicle for an extended period of time.

Be sure to check whether your policy has sufficient loss of use coverage if you are in the U.S.

Review U.S. coverage limits and restrictions

In some cases, your auto insurance policy may provide lower coverage limits or restrict certain types of coverage while you are in the U.S.

Accordingly, it’s important to review your auto insurance policy for any U.S. coverage limits or restrictions. And as mentioned earlier, remember that your coverage limits will be in Canadian dollars.

Some types of coverage you may want to review include:

• Collision coverage
• Medical benefits
• Attendant care
• Reimbursement for damaged luggage, clothing or personal items in the vehicle
• Death & funeral benefits

Should you suspend your car insurance for vehicles left in Canada?

If you’re leaving some or all of your cars in Canada for the winter that won’t be used while you are away, you may want to consider suspending or reducing part of your insurance coverage on those vehicles to save some money.

Even if you come back to Canada periodically over the winter and want to use your car while you’re home, this may be an option, but you’ll need to speak to your insurance broker to make sure you have adequate coverage while you’re home.

You’ll also want to check with your broker to ensure you maintain sufficient coverage if your vehicle is somehow damaged while you are away, even if you're not driving it.

Does your auto insurance coverage extend to Mexico?

While most auto insurance policies extend to the U.S., Mexico is a different story.

If you plan on taking your vehicle to Mexico for any period of time over the winter, speak with your broker first to find out what type of coverage you need.

Take your auto insurance company’s number with you

Always have your auto insurance company’s international toll-free number handy when travelling outside Canada. If you have an issue while you’re away, you may have to spend a lot of time on the phone with a claims adjuster.

The Bottom Line

Remember, not all auto insurance policies are created equal. Before you head south for the winter, take some time to review your auto insurance and understand your coverage while outside Canada.

And as always, when it comes to insurance, it pays to shop around so you can compare coverage and pricing.