Driving to Mexico? Don’t forget to buy Insurance
You need Mexico car insurance because it’s required and US /Canadian insurance coverage stops at the Mexican border. Every year Mexico implements stricter laws for uninsured motorists…not having quality Mexico Insurance can cost you money due to damage/loss to your vehicle, fines and more. Don’t risk it! Get a policy in 10 minutes or less!
The Two Most Important Reasons to Buy Mexico Car Insurance
When it comes to Mexico car insurance unfortunately there are a number of misconceptions regarding its importance. Far too many people believe that because it is Mexico that somehow no insurance means you will get a slap on the wrist, pay a $20 “fine” to the police officer, and be on your way. Unfortunately this is not the case and there are many reasons to ensure that you are properly covered before heading to Mexico. Here we discuss the two most important reasons.
Despite what many people think regarding Mexico car insurance, it 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), and Mexico is instituting similar laws. In fact in 2012 several notable states enacted these laws, including Baja and Jalisco. It is expected that additional states will follow suit. However, even those 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. The party at fault is then held until the ability to pay for the caused damage is demonstrated. In some cases this can mean jail time. A driver with insurance will have at least two important pieces that will help them in this situation. The first is liability coverage that will demonstrate the ability to pay for the damage. Second is legal assistance coverage which provides legal representation before the authorities, and bail bond. Even fluent Spanish speakers can find sitting in front of a judge with limited to no knowledge of the legal system intimidating. The bottom-line is that no insurance can equal a fine, or worse jail time. This is why many of the seasoned Mexico visitors call Mexico insurance the “get out of jail free card.”
Your US policy doesn’t cover you In Mexico
Some people believe they will be covered by their US auto insurance policy. This is flawed in a couple of ways. First, by Mexican law, liability insurance in Mexico must be provided by an admitted Mexican insurance company (this means they have gone through the process of getting registered with the Mexican Department of Insurance). None of the insurance carriers in the US have done this. There are some RV insurance carriers that have provided a Mexico Physical Damage endorsement, but this only covers damage to your vehicle, and again only applies to RVs and Travel Trailers. In addition, if you get into an accident will the Mexican authorities even recognize the name State Farm, Allstate, Geico, or Progressive? Probably not, just as our policemen, lawyers and judges don’t recognize Mexico insurer names Qualitas, ACE Seguros, Grupo Nacional Provincial, or ABA Seguros.
Also, 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 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 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 that they can’t, and they 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 (not available on Motorcycle policies) for the occupant of your vehicle in the event of an accident. But when it comes down to it, the most important reason to stay within the concepts is that it is required and your US policy doesn’t have anything to offer.
Get a Mexico car insurance quote now from several of Mexico’s top insurance companies.
Written By Derek Kartchner, Chief Revenue Officer Mexico Insurance Online
Mexico implements stricter laws
Another New Mexico Insurance Law | 2014
For another consecutive year, Mexico is implementing a major change to its insurance law.
In 2013 we saw a huge change in Mexican insurance law. Financial responsibility has always governed the insurance landscape in Mexico, but in a let’s drag you jail and sort this out kind of way. Responsibility was determined by local authorities and the guilty party became responsible. A bit different than what we see in the US, moreover the way that Mexico determined how injured parties would be compensated, was well–screwy and lacking.
But in 2013 that all changed and Mexico modernized their liability law. In the event of a Death, depending on the state (and the exchange rate) you can be responsible for more than $300,000 in damages. Still not a US-style get you for all your worth kind of way, but certainly a shift in the landscape.
Mexico, however, has done it again and continues to modernize their insurance law, and with good reason. As of September 23, 2014 all vehicles 2011 and newer on federal highways, roads, and bridges must have a minimum level of insurance of 100,000 pesos, roughly $7,700 depending on the exchange rate. Pretty minimal, but it’s a step in the right direction. Each year more and more vehicles will be subject to this law, until Mexico reaches its goal of requiring 100% of vehicles on the road to have insurance. The schedule is below.
|2014||2011 Model Year and Newer|
|2015||2008 Model Year and Newer|
|2016||2005 Model Year and Newer|
|2017||2002 Model Year and Newer|
|2018||2000 Model Year and Newer|
Of course with any law there are other factors and considerations that we won’t get into here. Economics/Human Psychology tells us that to change behavior there has to be some sort of driver or motivator. So what it is? It’s a fine, the failure to not carry insurance is a fine that can range between $100 and $200. Not huge, but higher than the average cost of a Mexico tourist auto policy.
So are tourists subject to these laws? Yes, they are, and all Mexico Insurance policies sold by Mexpro comply with this new law. In fact, you will see there is new verbiage on the declarations page in Spanish that helps the authorities understand that. While we at Mexpro believe there are greater reasons to buy insurance than the threat of a $100-$200 fine, we are pleased to see Mexico taking steps to modernize their insurance law. If you don’t agree with us, consider this, currently only 27% of drivers in Mexico carry liability insurance—just 27%! In the US roughly 85% of vehicles are insured. Check out the numbers below for comparison sake and see how Mexico compares to some of its Latin American peers.
So, if you have an accident in Mexico and you do not have Mexican Insurance, there is a 73% chance you will have to pay for damages out of pocket. Pretty disturbing.
Written By Derek Kartchner, Chief Revenue Officer