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In 2021, Finaccord reported that there were roughly 87.5 million expatriates globally, ranging from students to workers, and retired expatriates. This number is a considerable increase from the 50.5 million expats counted in 2017. Respondents cited health, safety, and security as important motivating factors for expatriating.
As travel restrictions and policies loosen today, people may have more varying reasons for wanting to settle in another country. One thing often overlooked, however, is the importance of auto insurance, especially for expats looking to own and drive their own cars abroad. Knowing how car insurance works in different countries is important for law-abiding purposes, but especially to save you from any financial trouble down the line. In this post, we cover some things worth knowing about auto insurance around the world.
While other countries may have similar auto insurance policies, the No Claims Bonus in the UK is one you should keep in mind when looking into car insurance. Sometimes called the No Claims Discount, this is a policy that functions by rewarding good driving. Finance Monthly explains that a No Claims Bonus is calculated in years, counting the number of years since a driver last made a claim on their car insurance. The longer a driver goes without making a repair claim, the bigger the discount becomes, saving you more money annually during the renewals. In case of an accident, making a claim may result in losing some or all of your No Claims Bonus, unless the accident is deemed to be not your fault by your insurance company.
As discussed in our Car Insurance post you can also lower your insurance premium depending on your profession. This is especially important to keep in mind if you are settling abroad for professional reasons. Insurance companies work out your riskiness on a points system, where high-risk professions are often assigned higher premiums. Racing drivers and journalists, for example, fall under high-risk. Nurses and social workers, on the other hand, get lower insurance premiums.
Over in the US, your insurance premiums largely depend on your state’s laws. Insights from Sound Dollar on auto insurance in the US note that several states have laws that limit what car insurance companies can consider when setting the rates – such as your credit score or gender. Other factors that can change your premium include your driving history, as well as whether or not you’re just buying liability coverage or full coverage.
One factor that depends on your state’s mandate is liability coverage. Liability insurance helps cover damages in accidents where you are legally responsible, and most states in the US legally require it for you to drive a car. It’s important to note that this insurance policy legally covers you, but not your car. Depending on where you plan to live in the US, it’s also worth inquiring about collision and comprehensive coverage. Collision insurance covers repairs and replacements for cars in accidents, while comprehensive insurance helps cover damages from vandalism, theft, and natural disasters besides collisions.
As you can see, while different countries have a similar, basic structure of how car insurance works, certain details may differ. In Australia, a unique car insurance policy called the ‘pay-as-you-drive’ could make all the difference and save you a lot of money in auto insurance. Case in point, a Perth man cut his car insurance fees by more than half, thanks to the ‘pay-as-you-drive’ insurance policy. Designed to reward drivers who drive their cars for less than certain distances – about 6,000km in this case – the pay-as-you-drive option could be a money saver for expats who live in areas where they wouldn’t have to drive to and from work all the time, opting for public transportation instead. With remote work becoming a popular option during the pandemic, you might want to check if the reduced driving scheme can save you some money on your auto insurance.
Recently, India has also adopted the pay-as-you-drive policy for its insurance companies. This insurance policy is also available in the UK under different names, such as ‘pay-by-mile’, ‘pay-as-you-go’, or simply ‘usage-based’ insurance. As always, it is best to check with your insurers so that you don’t miss out on important discounts and bonuses.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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