FOREIGN TRAVEL INSURANCE PROTECTION

Rough Notes, Jun 2005 by McCormick, Roy C

Personal insurance limitations during foreign travel require attention

Personal property and liability insurance provides broad protection not only at home and elsewhere in the United States but also abroad. However, when people consider visiting other countries, agents must recognize significant coverage limitations and communicate them to their insureds.

People who travel in other countries generally have homeowners insurance and automobile insurance. Some also carry personal umbrella liability insurance. As the traditional vacation period approaches, review the pertinent coverage provisions of these three forms of insurance with your insureds. The homeowners policy is the logical starting point. Personal property coverage and personal liability coverage follow insured travelers wherever they go.

Personal property coverage

In general, personal property coverage (C) in homeowners policies, including ISO and AAIS forms, covers the personal belongings taken along by an insured traveling family or individual within the limits specified in the policy for unscheduled personal property. The protection applies anywhere in the world.

Pay attention to special limits, sub-limits or caps on specified types of valuable items, or for specific kinds of loss. Notable limitations include: $1,500 or $2,500 for theft of jewelry and furs in any one occurrence, regardless of the number of pieces or items involved; $200 or $250 for loss of money; $1,000 or $1,500 in total for letters of credit, passports, manuscripts, tickets, stamps and related items; $250 for property used for business purposes.

Double check the special limits because there may be some variations. In individual cases, some insurers offer options to increase limits for additional premium. Valuable jewelry should be scheduled for its full appraised value by attaching a scheduled personal property endorsement to the homeowners policy or by issuing a personal articles floater policy.

Personal liability coverage

Just as is true of personal property coverage (C), personal liability coverage, section II of a homeowners policy, does not have territorial restrictions with respect to claims against insureds arising from personal acts while vacationing in foreign countries. In order to comply with policy notice requirements, it is important to report details to the insurer as soon as possible. A suit against an insured for damages must be brought in the United States or the insurer must agree to a settlement.

Personal auto policies

Personal auto policies written to cover private passenger autos owned by individuals and families apply only in the United States, its territories and possessions, Puerto Rico, Canada and while a covered car is being transported between ports thereof. Limitations, requirements and exceptions are significant.

There is no coverage under a personal auto policy while operating a car in Mexico. Insureds driving from the United States to Mexico must obtain special tourist automobile policies before crossing the border. Such policies, underwritten by a Mexican insurance company licensed by the Insurance Commissioner of Mexico, may be obtained at the border or from a legally authorized agent prior to entry. Offices of automobile clubs in the border states are a

convenient source of the needed protection, as are other offices that feature the service.

Note that many U.S. insurers offer a limited Mexico endorsement of personal auto policies to provide excess coverage over valid Mexican automobile insurance, when covered autos are used within 25 miles of the U.S.-Mexico border. Coverage applies on an excess basis over an underlying, primary Mexican policy. The endorsement is invalid in Mexico more than 25 miles from the border.

Regarding Canada, U.S insurers in general have filed a Canada Non-Resident Inter-Province Motor Vehicle Liability Insurance Power of Attorney and Undertaking (PAU). They agree to several criteria regarding financial responsibility for possible civil actions against insured drivers when in Canada, including a commitment to satisfy judgments at least at the minimum financial responsibility limit applicable in the particular province. Compliant U.S. insurers have identification cards for distribution to insureds who will be driving in Canada.

Driving a rented car in other countries requires insurance written to comply with the laws and regulations of those countries. Rental agreements used by major car rental companies include or make provision for insurance complying with local requirements. The protection of personal auto policies purchased in the United States is of no value when operating or purchasing cars abroad.

Personal umbrella

Personal umbrella liability insurance is valuable to a family or individual traveling abroad. It applies worldwide, without territory restrictions. It is subject to excess and retention provisions, but it is a guarantee against the threat of highdollar, third-party claims arising from personal acts and use of non-owned automobiles in distant places. It is important that a family that travels abroad and, thus, is vulnerable to high-dollar lawsuits, will want to keep umbrella insurance as a permanent part of its insurance program. In the absence of an umbrella, stress the importance of high limits for personal and auto liability insurance.