ALTHOUGH NOTHING SEEMS RIGHT IN CARS…
There is mass confusion in the relocation and international mobility marketplace on the subject of automobile insurance. Much of it is the result of financial illiteracy, some is attributable to a complex and archaic insurance system, and a lot just comes down to the misalignment between domestic supply and international demand.
Typically, insurance for an automobile comprises two elements, a) first party physical damage and b) automobile third party liability. In almost all countries, local law requires drivers to have third party liability insurance; which is clearly in the public's best interest and is a highly effective means of supporting currency and protecting against capital flight in developing economies. In most jurisdictions, whether or not you choose to protect against damage to your own rusty bucket of bolts is up to you.
From the liability perspective, the risks to international assignees are real and undeniable. Negotiating unfamiliar roads, vehicles, traffic signage, driving conventions and language barriers all factor into an aggravated risk profile with an unqualified potential for serious injury or death. However, these circumstances hardly justify the difficulty one encounters when trying to procure insurance as or on behalf of an assignee. In a globalizing world a mature driver with a clean record, it would seem, needn't be handled with the same perspective as a novice with a litany of incidents and infractions peppering his file.
Foreign exposures aside, it is important to know that administering car insurance is messy, expensive stuff even for domestic insurance companies. The market is highly competitive, premiums are relatively low and the processing of paperwork around frequent interim deletions, additions and modifications makes for wafer-thin profit margins. Ergo, the obvious survival strategy is exceedingly high volume, low-touch treatment of a preferred subset of the market. Not surprisingly then, the majority of domestic auto insurers are looking to attract and carve out the low risk, seasoned and mature local drivers (surely you have seen lots of seniors discount adverts on TV…they're not just being nice) and invest heavily in automated processes and group affinity programs. Clearly then, there is exceedingly little incentive for companies to take on new drivers, foreign drivers and drivers with bad records.
However, at least in the case of young and bad drivers they can make a business case on readily available data to charge exorbitant rates and make profits proportionate to risk. Indeed, data, and lots of it drives the actuarial math that allows underwriters to set rates. The complicating factor with inpatriates is that their driving records are either unavailable or don't jive with the local processing system owing to language, currency and the challenges of global communications.
Charitably, your typical auto insurance brokers assistant isn't predisposed to do forex calculations and translations on the spot. Rather, he or she is trained to keypunch three numbers onto a screen and quote the number the system spits out. Chasing down records across borders is not even up for discussion.
Unfortunately it is not just the business sense of insurers that's working against you. Registering a rating matrix and policy form with the relevant authorities in the world of auto insurance requires considerable effort and investment on the part of an insurer. Doing so just for inpatriates rarely if ever is worth the trouble.
Finally, the laws that govern drivers typically require that you buy your insurance from a domestic insurance company and carry with you a certificate in a prescribed form in your vehicle at all times which rules out any seemingly simple offshore solution that pools expats around the world.
Whatever the reason, you wouldn't want to be pulled over in the middle of the night or - perish the thought - be in a serious accident and upon request from law enforcement produce a wrinkled, faded, and grainy fax document in a foreign language. The entire system works on local standards and local standards alone.
For every rule there is an exception and periodically, insurers will develop something for inpatriates. For example, from time to time and place to place they team up with manufacturers of luxury vehicles who together woo the ambassadorial/consular niche subset. However, invariably, at end of the day, such initiatives come in good economic times and go during recessions, or are abandoned when strategic imperatives lead elsewhere.
At the other end of the spectrum is first-party auto damage insurance, which is commonly available through several providers. Caution is advised and concern is warranted when expats buy "auto insurance for expats" and assume they have all required elements of cover when what they really have is insurance against damage to their own vehicle, which is the far less important and costly than third party coverage.
Carriers are less forthright about the distinction than one might hope while assignees and their handlers are less circumspect than the situation demands.