What You Need to Know About Purchasing Mexico Auto Insurance
Each year, Mexpro's staff compiles a list of the most asked questions from our customers. Below are our answers to the most commonly asked questions.
It is ironic that most of us use great care when purchasing insurance in the US or Canada, yet lower our standards when purchasing an auto insurance policy for travel to Mexico.
When purchasing any type of Mexican auto insurance, buyers should analyze a number of issues including:
- My US/Canadian insurer says they will insure me in Mexico. Do I really need coverage from a Mexican company?
- What are the differences between a US/Canadian and Mexico auto insurance policy?
- What type of Mexico auto insurance coverage do I need, and at what limits?
- Can I trust the US broker selling me Mexico insurance?
- Is the Mexican insurer financially stable?
Do I really need to purchase coverage from a Mexican insurance company?
Yes, Mexico law mandates that only insurance companies that are licensed and admitted in Mexico can provide civil liability auto insurance coverage that is recognized by the judicial system of Mexico. Although some US and Canadian insurance companies will extend physical damage coverage (collision, comprehensive) on your auto or RV while you are driving in Mexico, they cannot and do not provide Mexico liability.
What are the differences between a US/Canadian and Mexico auto insurance policy?
There are tremendous coverage differences between US and Mexican auto liability insurance policies. Though far too many minor differences to list, here are the most important ones.
- Coverage is void if a claim is not filed in Mexico (you MUST obtain an adjuster's report before returning to the US).
- Damage as a result of being under the influence of alcohol or drugs is not covered.
- Damage caused by a person without a valid driver's license is not covered.
- Partial Theft and Vandalism are not covered; coverage only applied to a stolen vehicle.
- Flooding due to tides is not covered, though other flood coverage is provided.
- No coverage is provided for damage to the underside of a vehicle that is overloaded or as a result of driving on rough roads.
- There is no coverage if passengers of the same vehicle sue each other. However, no-fault medical payments coverage is provided to passengers.
For a detailed list of what your Mexico auto insurance covers, please read your terms and conditions.
What type of Mexico auto insurance coverage do I need, and at what limits?
Mexico auto liability insurance is all that is required in Mexico. Additional, more complete policies may be purchased that cover physical damage and medical payments, as well as providing legal and travel assistance among other things.
Auto liability in Mexico is determined by Civil Law and is based on limits defined by Mexican Statute.
Personal Injury lawyers, as we know them in the US, do not exist in Mexico. Claims for pain and suffering and emotional distress are virtually unheard of, and claims for property damage to others and bodily injury to others are settled on an actual loss basis, guided by statute.
It is far more likely to have a property damage to others liability claim than it is to have a bodily injury to others liability claim. This is almost the exact opposite of how claims are settled in the US.
Keep in mind that the liability insurance you purchase from a Mexican auto insurance company will not respond to claims or suits brought against you in the United States or Canada for an incident which occurred in Mexico. All liability insurance claims under a Mexican auto insurance policy must be brought and adjudicated in Mexico for coverage to respond.
AUTOMOBILE INSURANCE LIMITS
Automobile insurance rates, coverage, limits, and deductibles vary greatly among Mexican auto insurance companies. The three most important things to look for when choosing an insurance company include:
Does the policy offer adequate liability limits, or does it reduce the amount payable by using split limits?
Split limits reduce the amount available for property damage to others. An ideal limit of insurance on a Mexican Auto insurance policy is $500,000 Combined Single Limit (CSL). Beware of lower split limits of $40/80/40, for example.
Does the insurer automatically include Legal Aid and Travel Assistance coverage?
These additional options should be included in every auto liability insurance policy in Mexico. They will help you tremendously in the event of an accident. Without them, you could be on your own, racking up legal bills and huge headaches until your liability has been determined.
What physical damage coverage is provided and what are the deductibles?
The policy is written on a named perils basis, which includes coverage for collision, certain meteorological events, total theft, fire, and other perils. Deductibles are generally a percentage of the value of the insured vehicle although special endorsements offering fixed deductibles are available.
The main exclusions on a Mexican auto insurance policy historically have been vandalism and partial theft, but now this coverage can be added back under a special endorsement.
Is the US Broker, providing insurance for Mexico, reputable?
Thousands of US insurance agents and brokers offer insurance for Mexico. Logically, a great number of these agents are located close to the border. Some of the important distinctions to keep in mind when choosing an agent or broker are:
Does the agent or broker use online systems to issue these auto liability policies in Mexico?
If not, the data won’t be immediately available to authorities in Mexico.
Does the agent have experience in the Mexico auto insurance market and in the US market?
It is important that the agent you work with has a vast knowledge of the differences between US and Mexico auto insurance and can counsel you regarding the potential gaps in coverage among these policies.
Purchasers of insurance for Mexico should have confidence that they will receive professional, knowledgeable service when they need the coverage to respond or in the event of a coverage dispute. Check with your US agent to see if they offer Mexico auto insurance. Your US agent or broker can issue a Mexpro policy for you via www.mexicoinsuranceonline.com.
Does your insurance agent carry Errors and Omissions insurance?
Ask your agent if he or she carries Errors and Omissions insurance; it will protect both you and your agent in the event of a coverage dispute.
Is the Mexican auto insurance company financially stable?
No matter how reputable your agent or broker, if they are placing your insurance with a troubled insurer you could be in for some unpleasant surprises in the event of a claim.
There are over 50 insurance companies in Mexico. Purchasers of auto liability insurance in Mexico should continually check the www.ambest.com website to ensure that the insurer has an A-rating.
Most consumers would never use an unrated insurer to purchase US or Canadian insurance. Likewise, you should never purchase Mexico auto insurance coverage from an unrated insurer! Ask your agent about the size and financial strength of the insurance companies they use. If Mexico experiences economic problems, the peso is devalued, and/or Mexico experiences a natural disaster, how will the insurer fare?
Every year Mexpro provides the Mexico insurer rankings for the previous year so our customers can see how each company has performed over the past year.
Insurance in Mexico is just as complex as it is in the US and Canada. Although all types of insurance are available in Mexico, coverage, terms and conditions vary greatly among insurers.