Purchasing insurance for Mexico
This article includes a very important update regarding the 2013 change to Mexico Liability Laws.
For more than 25 years I have had the opportunity to help people properly protect their vehicles south of the border. Over time, I've compiled a list of our most frequently asked questions. It is ironic that most of us purchase our insurance coverages in the US with great care, yet use a lesser standard of care when purchasing coverages for Mexico.
When purchasing any type of insurance for Mexico, buyers should analyze a number of issues including:
- Do I need to purchase coverage from a Mexican Insurer?
- What are the differences between a US and Mexico Insurance policy?
- What type of insurance do I need, and at what limits?
- Are the US Broker and Mexican Insurer they represent reputable and in sound financial condition?
Why do I need to purchase coverage from a Mexican insurer?
Mexico law mandates that only insurance companies which are licensed and admitted in Mexico can provide "civil liability" coverage that is recognized by the judicial system of Mexico. Although a few US 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 Mexican liability.
What are the differences between US and Mexican coverages, and what type of insurance and what limits do I need?
There are some tremendous coverage differences between US and Mexican insurance policies, and far too many "minor" differences to list here. Following are some of the major differences outlined by type of insurance.
Liability in Mexico (liability coverage is a part of all homeowners, auto, commercial property policies, etc.) is determined by Civil Law, and is based on limits defined by Mexican Statute. Depending on your view of things, this is either a brilliant system or an antiquated one. I like it. 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.
In 2013, the potential damage limits for a negligent accident causing a fatality have increased substantially.
In the past — prior to 2013 — the liability damages imposed on an at fault driver who caused a negligent fatality in Mexico were capped at 750 days multiplied by the local Mexico Minimum Wage (approximately $ 50,000 total damages in most Mexican States). Effective immediately, that limit has been increased by the Mexican Government to 5,000 days multiplied by the local Mexico minimum wage (up to approximately $ 300,000 US Dollars total damages, depending on the Mexican State).
WE NOW RECOMMEND THAT ALL OUR CUSTOMERS PURCHASE A MINIMUM OF $300,000 in LIABILITY LMITS, AND SERIOUSLY CONSIDER THE $500,000 LIMIT!
What happens if I have a current policy in force with limits of $ 50,000 or $ 100,000?
Each of our main underwriters, ABA Seguros, ACE Seguros, and GNP Seguros have agreed to honor the $ 300,000 Death Liability Limit on all currently in force policies until expiration. So you do not have to do anything if you purchased your existing policy on or before February 4, 2013 and it is still in force
Keep in mind that the liability insurance you purchase from a Mexican Insurer will not respond to claims or suits brought against you in the United States or Canada for an "incident" which occured in Mexico. All liability claims under a Mexican Insurance policy must be brought and adjudicated in Mexico for coverage to respond.
If you have any questions about this new law please feel free to contact us today at 888-467-4639. We cannot stress enough the importance of understanding these new liability limits and the need for higher limits when purchasing Mexico Auto Insurance in the future.
Automobile insurance rates, coverages, limits and deductibles vary greatly among Mexican companies. Some important items to look for are:
Does the insurer offer adequate liability limits, or does the policy reduce the amount payable by using split limits?
Split limits reduce the amount available for "Property Damage to others." We advise all our customers to purchase at least $ 300,000 US Combined Single Limit liability coverage. Beware split limits of $40/80/40 USD, for example.
Does the insurer automatically include Legal Aid and Travel Assistance?
These "additional" coverages should be included in every policy. 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 are the Physical Damage coverages and deductibles?
Mexico insurance policies provide collision coverage, and theft coverage, much like in the USA and Canada. Some offer fixed deductibles, which are much better than percentage of the vehicle deductibles. Some offer partial theft and vandalism, some exclude this coverage. For a detailed list of coverages, please obtain a quote on mexpro.com.
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 through the mexpro website
Is the US broker reputable?
Thousands of U.S. 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 policies, so that the data is immediately available via the web to Authorities in Mexico?
- Does the agent have experience in the Mexico market and does the agent have experience in the US market? It is important that the agent you work with has a vast knowledge of the difference between US and Mexico 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 USA agent to see if they offer Mexico Insurance. Your USA agent or broker can issue a MexPro policy for you via www.mexicoinsuranceonline.com.
- Most reputable insurance agents carry Errors and Omissions insurance to protect themselves, and their customers, when legitimate mistakes are made. 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 insurance company reputable?
As the global economic environment continues in a state of uncertainty, it may be more important than ever to purchase insurance for Mexico from a financially strong insurer. 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 more than 50 insurance companies in Mexico; like in the US, some are better than others.
Although some US insurers have purchased ownership interests in Mexican Companies, these Mexican companies operate independently of the US parent company. Consumers in the US or Canada would never buy insurance from a company that is not A-rated, yet many in Mexico unknowingly buy from unrated or vulnerable insurers who do not carry an A- rating. To check if an insurer in Mexico is A-rated, or has an A-rated parent, visit www.ambest.com.
Ask your agent about the size and financial strength of the Insurance companies they use; in the event of further economic problems and/or the devaluation of the peso coupled with a few natural disasters such as a hurricane or flood, how will the insurer fare? (For a list of Mexico insurers ranked by written premium, please feel free to call our office at 1-888-INS-4-MEX.)
As you can see from this brief summary, insurance in Mexico is just as complex as it is in the US. Although all types of insurance are available in Mexico, coverages, terms and conditions vary greatly among insurers. For a free, no obligation coverage analysis and quotation for either Personal or Commercial insurance in Mexico, please contact Mexico Insurance Professionals at 1-888-INS-4-MEX or email us via our website at www.mexpro.com.