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For many years tourists and businesspersons who drive to Mexico have been purchasing insurance to properly protect their vehicle; however, still today many of the same questions are being asked. It is ironic that most of us use great care when purchasing insurance in the US, yet use a lesser standard of care when purchasing coverage for Mexico.
When purchasing any type of insurance for Mexico, buyers should analyze a number of issues including: 1. Do I need to purchase coverage from a Mexican Insurer? 2. What are the differences between a US and Mexico Insurance policy? 3. What type of insurance do I need, and at what limits? 4. 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 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. The following are some of the major differences outlined by type of insurance.
LIABILITY 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. 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.
Personal Injury lawyers, as we know them in the US, do not exist in Mexico. Therefore, liability limits and claims exceeding $ 100,000 are rare. It is far more likely to have a "Property Damage to Others" liability claim that approaches this limit (damaging someone else's new Chevy Suburban, valued at $ 55,000, for instance) than it is to have a "Bodily Injury to Others" liability claim that approaches this limit (damaging the occupants of the Suburban, for instance). This is almost an exact opposite of how claims are settled in the US.
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 occurred in Mexico. All liability claims under a Mexican insurance policy must be brought and adjudicated in Mexico for coverage to respond.
AUTOMOBILE INSURANCE 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". An ideal limit of insurance on a Mexican Auto policy is $ 100,000 Combined Single Limit. Beware of lower split limits of $ 40/80/40, 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? The main exclusions on a Mexican auto policy are Vandalism and Partial Theft, but now this coverage can be added back under special endorsements which can be purchased at www.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 via the www.mexpro.com website.
Is the U.S. Broker Reputable? Hundreds 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:
1.Does the agent of broker use online systems to issue these policies, so that the data is immediately available via the web to Authorities in Mexico?
2.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.
3.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 over 50 insurance companies in Mexico; similar to the U.S., "some are good and some are bad".
Although some US insurers have purchased ownership interests in Mexican Companies, these Mexican companies operate independently of the US parent company.
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? You can also check to see if the Mexican Insurer is A rated at www.ambest.com. Most consumers would never use an unrated insurer to purchase USA insurance….it may be even more important to use only A rated insurers for Mexico coverage.
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, with the option to purchase and print your policy online, please visit www.mexpro.com
