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Insurance for Expats in the United States Of America

Submitted: July 2013

Do not wait for problems to arise before reviewing your insurance arrangements. Once you have a problem, it is already too late. Being poorly insured is risky whereas being over-insured is expensive.

There is a wide range of insurance products available in the US, and it is advisable to shop around and compare before taking out an insurance policy. It’s also good to check the financial strength and the reputation of your insurer.

If you are unclear about your cover or your needs whilst you are in the US, you might wish to check your existing insurance arrangements in your country of origin. This is important if you want to avoid double coverage.

Insurance isn’t necessarily a country-specific issue, but how much insurance you need may vary from one country to another.

Home insurance

Your home insurance needs depend on whether you own your home, or if you rent it.

A homeowner insurance policy protects you against damage to your building, and is generally required to secure a mortgage. This may cover the costs of rebuilding your property from scratch or the costs of certain exceptional repairs. Homeowner insurance may also cover you against third party liability if an accident happens in your home.

As for all insurance policies, it is up to you to decide how generous you want your cover to be, what the excess amounts are, which unexpected expenses are covered (e.g. alternative accommodation or legal costs), etc. In US insurance jargon, an excess may be called a “deductible”.

Renters’ insurance is much cheaper than homeowner insurance, but it only covers your belongings and public liability if an accident happens in your home.

It is very important to have public liability coverage. If you don’t, you may end up having to pay tens or hundreds of thousands of dollars if an accident takes place in your home.

Going away from home

If you expect to be away from your home for more than one month, you should let your insurer know. Failure to do so may result in a claim being rejected if something happens to your home whilst you are away.

Home insurance exclusions

Check if something is excluded from your home insurance policy. If you live in a high risk area (e.g. with regard to floods or earthquakes), your insurer may require you to pay extra to be covered on some risks that your insurer would otherwise exclude.

Vehicle insurance

Vehicle insurance requirements may vary from one state to another. In most states vehicle insurance is mandatory, and your policy must include at least third party cover. This should insure you against potential liabilities for third party death or bodily injury, but not damage or theft of your own car. Detailed minimum insurance requirements in individual states are available here.

If you need your vehicle to have more than just third party cover, you might wish to take out a comprehensive vehicle insurance policy.

Health insurance

Regarding health insurance, expatriates may take out an international cover from an insurer in their home country. International covers tend to be more expensive, but they are straightforward and they can spare you the need to have separate insurance policies (i.e. one in your home country and one in the US). Expats who frequently move across borders are more likely to need an international cover to achieve peace of mind.

Health insurance is strongly recommended as healthcare in the US is very expensive (hospital costs are easily in excess of $10,000), and you may be denied treatment (other than emergencies) unless you pay upfront. Additionally, health insurance may attract substantial tax benefits. See HEALTHCARE – Health Insurance for Expats in the US.

Life insurance

Life insurance can be particularly helpful if your family is financially very dependent on you, as it may guarantee a lump sum payment to your family if you die.

Do assess carefully the burden of retaining foreign life insurance while you are resident in the US. Do also check the geographical extent of your existing life insurance policy when you move across borders.

Business insurance

If you run a business in the US, you probably need personnel insurance and public liability insurance.

Personnel insurance protects you in case one of your employees has an accident or an illness in connection with his/her employment duties.

Public liability insurance covers you against certain third party claims against your business. This may also include legal costs.

 

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