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The insurance implications of exporting your car from Canada to the United States

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Almost 400,000 people cross the Canada-USA border daily, many of them in private vehicles. You’ve probably made the trip yourself at least once, driving across the border for a vacation or shopping trip, without any question about whether your car was fit to enter the United States.

Even though driving across the border for a months-long visit is no problem, moving to the United States with your car is a different story. Permanently exporting your car to the USA requires a heavy dose of paperwork, and as CTV recently reported, may not even be allowed.

Canadian car insurance only goes so far in the United States

Canada and the United States have treaties in place for travellers to bring their cars across the border for short periods of time. Canadians travelling to the United States can keep their car south of the border for up to one year at a time without incurring any fees or paperwork. Americans coming north enjoy the same privilege and can keep their car in Canada for up to 36 months if they have a valid student or work visa.

In support of this kind of travel, most Canadian car insurance policies are valid anywhere in Canada and the continental United States. Making a permanent move is trickier, however, and your Canadian car insurance won’t cover you for a long-term stay south of the border.

The first hurdle is that you need to maintain a permanent residence in Canada to qualify for a Canadian car insurance policy. If you give up your Canadian residence, you’ll have to give up your car insurance along with it.

The second hurdle is that car insurance policies are underwritten with the expectation that you’ll be spending most of your time close to home. Extended visits of up to six months are likely fine, but if you plan to keep your car in the United States for longer than half a year, you risk an insurance claim being denied. The Canadian insurance company Intact says it assesses claims on an individual basis for stays longer than six months. 

In order to maintain the coverage you need when moving to the US, you’ll need to get car insurance in the state where you settle – and that’s where Canadians are running into trouble.

Canadian cars must meet strict rules to be insured in the United States

Getting a car insurance policy in the United States is easy if your vehicle was originally sold there – but insuring a car that was originally sold in Canada requires the vehicle to be permanently exported to the US and registered in the state it will primarily be used.

Even though driving across the border for a visit is no trouble, importing a vehicle to the United States is a cumbersome process that must satisfy multiple agencies.

Exported cars must meet US safety and emissions standards

The United States Department of Transportation (DoT) and Environmental Protection Agency (EPA) have strict rules for the safety and emissions standards of vehicles sold in the US. The DoT has specifications for overall safety and bumper standards, while the EPA enforces emissions. According to US Customs and Border Protection (CBP), a vehicle that meets those standards has most likely been manufactured for sale in that country. 

If your vehicle meets the American safety and emissions standards, it will have a label on the engine compartment that says so. Alternatively, you can get a letter of compliance from the manufacturer attesting that the vehicle meets the necessary standards to be permanently moved to the US. 

According to CTV News, Toyota Canada and Kia are among the manufacturers who have stopped issuing compliance letters to Canadians who want to move their car to the US. That report says the decision may be in part to prevent cars from being moved and sold for an unfair profit amid a shortage of new vehicles.

If your vehicle doesn’t meet the US standards, or you can’t get the appropriate proof that it does, your final recourse is to hire the services of an independent commercial importer. An importer may be able to perform necessary modifications to your car to meet the requirements, but their services are costly and it’s likely more cost-effective to buy a new car in the US.

The US Department of Agriculture also gets a say

The US Department of Agriculture requires that any vehicle imported to the United States be free of foreign soil, so as to prevent the movement of harmful pests and invasive species. US Customs and Border Protection will inspect your car and could refuse it entry if it’s not sufficiently clean.

Duty fees apply

The sales taxes generated from vehicle sales add up to big revenue for governments, who want their piece of the pie.

When you buy a car in Canada and move it to the United States, the US Internal Revenue Service (IRS) wants to make up for the tax it would have collected were the vehicle sold in the US. A car permanently moved to the United States for personal use is dutiable at 2.5% of its value, whether it’s new or used. 

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Car insurance is mandatory in most US states

While the minimum insurance requirements are much lower in most parts of the United States than Canada, car insurance is mandatory everywhere in that country except New Hampshire, Virginia and South Carolina.

Without the minimum coverage, you could face fines, a license suspension, and even jail time. Even with the minimum coverage, you’re unlikely to have the protection you need to pay for your expenses after an at-fault accident in a particularly litigious country.

The bottom line

Moving a vehicle to the United States is becoming more difficult, and your Canadian car insurance may not cover you for such a move. Ask your insurance broker for details on your coverage before travelling to the US for an extended period of time and consider buying a car in your destination to avoid the headaches that come with exporting your Canadian car to the USA.

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