Do I Need Mexico Car Insurance?
When it comes to Mexico car insurance there are a number of misconceptions regarding its importance. Many believe that "no insurance" means you will get a slap on the wrist, pay a $20 fine to a police officer, and then be on your way—because it is Mexico.
Unfortunately this is not the case. There are many important reasons to be sure you are properly covered in Mexico, but here are the most important.
1. Mexico Insurance Is Required
Despite what many people think, Mexico car insurance is required. In the US each state has "state minimum limits" and people without insurance face fines and confiscation of vehicle (depending on the state).
Mexico is instituting similar laws. In fact, several notable states enacted these laws. It is expected that additional states will follow suit. However, even in the states that don't have these types of laws, there is a de facto requirement of insurance that exists in all of Mexico, and that is financial responsibility.
In the US when there is an accident, insurance information is exchanged, and we go on our way. In Mexico, things are slightly different, and an accident means facing a local judge who determines fault.
What if I'm found at Fault?
- The party responsible for an accident in Mexico is held until their ability to pay for the caused damage is demonstrated. In some cases this can mean jail time.
- A driver with the following insurance coverage options will be in good shape if they are at fault.
- Liability coverage [required by Mexican law] that will demonstrate the ability to pay for the damage.
- Legal assistance, which provides legal representation before the authorities, and bail bond.
When one possesses limited to no knowledge of the legal system in Mexico, sitting in front of a judge can be intimidating, even for Spanish speakers.
The bottom-line is that not having insurance can equal a fine, or worse, jail time. This is why seasoned Mexico visitors call Mexico insurance the "get out of jail free card."
2. Your US Policy Does Not Cover You in Mexico
Some people believe they will be covered by their US auto insurance policy. This belief is flawed in a couple ways.
- First, by Mexican law, liability insurance in Mexico must be provided by an admitted Mexican insurance company (this means the insurance company has been registered with the Mexican Department of Insurance). No US insurance carriers have this designation. Some RV insurance carriers do provide a Mexico Physical Damage endorsement, but this only covers damage to RVs and Travel Trailers.
- In addition, Mexican authorities likely won't even recognize names like State Farm, Allstate, Geico or Progressive. In the same way, US policemen, lawyers and judges don't recognize Mexico insurer names like ABA Seguros, Grupo Nacional Provincial or El Aguila.
When you look at a US auto policy you will usually see language that is similar to the following:
The policy territory is:
The United State of America, its territories or possessions;
Puerto Rico; or
This policy also applies to loss to, or accidents involving, "your covered auto" while being transported between their ports.
What this means is that US policies specifically exclude coverage for anywhere outside of the US, Puerto Rico, or Canada.
There is an endorsement that would include Mexico, but it is extremely limited and usually has the following language:
Auto Accidents in Mexico are subject to the Laws of Mexico, not the laws of the United States. Under Mexican Law auto accidents are considered a criminal offense as well as a Civil Matter.
The coverage we [your US insurer] provide you by this endorsement does not meet Mexican Auto insurance Requirements.
You are required to purchase liability insurance through a licensed Mexican insurance company for this endorsement to apply.
In addition, this endorsement usually limits coverage to 25 miles. While this may vary by company, the fact that there is a limitation creates a problem. One minute you could be covered, and within a mile you could be out of coverage.
One final thought; let's assume for a second that we did have a US carrier that insisted they were able to provide coverage in Mexico. How would they provide claims service? How would they deal with the unique legal system? What kind of infrastructure do they have to get you out of jail, repair your car or any of the other things insurance does for us? The truth is they can't; US insurers really aren't capable of providing you with what you need when it comes to Mexico insurance.
There are several other reasons to buy Mexico insurance including protecting your own car, travel assistance, or providing medical payments for the occupants of your vehicle in the event of an accident. When it comes down to it, though, the most important reason is that it is the law and your US policy doesn't have anything to offer.