If your vacation will take you and your car across the Mexico or Canadian border, it's important to understand the auto insurance requirements for your destination.
If you're heading to Mexico, you should assume your U.S. auto insurance policy will not cover you south of the border, according to the U.S. State Department. You'll need to buy Mexican automobile liability insurance from a company authorized by the Mexican government.
Mexican law requires that drivers have the means to pay for all damages. If you don't have the right insurance, you could spend time in jail while the investigation is completed, according to AAA. Fortunately, you can get auto insurance that's valid in Mexico pretty easily, even before you leave the United States -- brokers sell it all along the border, according to AAA.
While you're not required to have collision insurance, you may want to obtain that as well to protect your own car in the event of an auto accident. Even if you have collision coverage added to your U.S. policy, it probably won't cover damage that happens in Mexico.
You'll also need to understand the differences between Mexican and U.S. insurance coverage. Mexican insurance doesn't usually pay for vandalism or minor damage, for example. Also be aware that, unlike in the United States, the legal presumption in Mexico is that people are guilty instead of innocent. If you're involved in an accident, you could be detained by police until they decide who's at fault, so it's a good idea to purchase a policy that covers legal aid and bail bond. Contact the nearest U.S. consulate for assistance if you're involved in an accident.
In some cases, your U.S. car insurance may cover limited driving in Mexico. According to Allstate, for example, its policies will protect you as long as you're within 75 miles of the border (for fewer than 10 days).
Fortunately, the insurance situation isn't nearly as complicated for travelers who are heading north into Canada. As long as you're traveling as a tourist, your own U.S. auto insurance should cover you.
You do, however, have to show proof of insurance before you can drive over the border. The State Department advises U.S. drivers that they will need to obtain a Canadian insurance card from their own insurance company before they enter the country. You also should bring a copy of your U.S. auto insurance policy, according to GEICO -- and don't forget to bring your vehicle registration documents.