Securing Auto Insurance for a Foreign Employee

For a foreign employee temporarily transferred to work in the U.S., getting permission to own and drive a car can be a long and tedious process. Before the non-U.S. citizen can apply and be granted a driver’s license, in most states he or she must be issued a social security card, which usually takes two to eight weeks. Also, most auto insurance companies will only insure a driver with a valid driver’s license. Finally, large corporations usually impose their own practices and rules on foreign nationals to protect them against liability in case the non-U.S. employee has an accident.

An insurance agent or broker that is familiar with the licensing and insurance requirements in each state can often help ease the process of a non-U.S. citizen acquiring a driver’s license and insurance coverage.

Lately, in an attempt to encourage global trade, many states have arranged driver’s license reciprocity agreements with other countries. These agreements usually exempt foreign drivers from having to obtain a driver’s license in the state where they are temporarily living. Whether a specific state has reciprocity with another country can be determined by calling the state’s department of motor vehicles.

An example of a state that has accepted some reciprocity with other countries is New York. In New York, the foreigner holding a driver’s license from his or her own country does not need to apply for a New York license unless they become a permanent resident of New York.

Once the requirements for a driver’s license are met, there are several insurance companies that will provide coverage to foreign visitors. Usually these are “non-standard” divisions within the insurers.

Because obtaining a driving record from a foreign country is difficult and time consuming, underwriters regard persons from another country as having no driving record and usually place them in a “high-risk” pool. The policy is the same as for any high-risk driver, with premiums substantially more than those paid by a U.S. driver with an excellent driving record.

When applying for auto insurance in most states an International Driving Permit will not substitute for a U.S. driver’s license. An IDP only provides evidence that the non-U.S. citizen has a valid driver’s license in his or her own country. An IDP, however, will enable a foreign national to rent a car.

Although renting a car may be feasible for a brief stay of several weeks or even a month, the cost of the various insurance coverages, especially the collision damage waiver, offered by rental car companies can be expensive. Charges for such coverage can be $15 to $40 per day depending on the type of vehicle rented. In just a month or two these charges could add up to much more than the cost of a six-month auto insurance policy.

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