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How does my car insurance work if I buy a car in the United States?

Auto Insurance

By Joanne Lemna | September 27, 2016

We’ve known it for years: The cost of buying a car in Canada is much more expensive than purchasing the same car in the United States. Some studies show that Canadians can pay on average 20% lessfor the same vehicle if they shop south of the border. It’s no wonder Canadians will head south to find their vehicle. We’ll review what you should consider and how your car insurance will work if you buy a car in the United States.

Things to Do Before You Buy a Car in the US

Here are a few things to do before you buy a vehicle in the United States:

  • Verify that the vehicle you want is allowed to be imported from the US to Canada (done online through Transport Canada). This will depend on the car’s age country of origin emissions and licensing.
  • Find a reputable dealer. This will ensure your vehicle is safe reliable and in import condition. Check out reviews!
  • Understand inspection requirements. You’ll need to ensure the vehicle will pass Canadian inspection requirements – Transport Canada can provide more information on federal inspection requirements.
  • Financing may not be an option in the US. Credit scores aren’t universal and your Canadian credit score may not be recognized in the US. This can lead to higher financing rates or ineligibility to finance a vehicle. You may have other issues such as a fluctuating dollar and payment problems if you finance a vehicle in the US.
  • Ensure you secure a bill of sale vehicle title and the car’s VIN. This documentation is required by Canadian customs.
  • Bring along a copy of your driver’s license passport and valid car insurance.
  • You will need car insurance for the vehicle before you drive it off the lot.
  • Contact your insurance broker or company and discuss your plans. They’ll help direct you to insure your new vehicle is insured when you bring it across the boarder.

Car Insurance When Buying a Car in the United States

Car insurance when buying a car in the United States depends on your individual insurance company . You should call your insurance broker or company before you cross the border to discuss your plans.

Normally when you buy a new car there is a grace period when your new vehicle will be covered by the car insurance for your old vehicle (so long as you had a valid car insurance policy). However you will only have the same amount of insurance as you had for the old vehicle. For example let’s say your old vehicle was worth $5000 on the market but your new one is worth $25 000. Your existing insurance would usually only cover replacement up to $5000.

This may not apply in the US. Some insurance companies also only offer limited protection in the US require you to inform them that you’re travelling or may not cover driving in the US at all. That’s why it’s critical to talk to your insurance broker or insurer to ensure you’re covered.

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