Driving in Mexico comes with plenty of surprises. Your car insurance shouldn’t be one of them.
The problem is that many of us bring our assumptions about car insurance with us from the U.S. or Canada.
We assume “full coverage” back home has us covered here.
We assume the other driver will have insurance.
Or that, if we have the policy on our phone, we’re good to go.
Those assumptions can get expensive fast.
Mexico requires vehicles to carry third-party liability insurance, and that coverage is designed to pay for damage or injuries you cause to other people and their property.
For foreign-plated vehicles, the required third-party liability coverage must be issued by a licensed Mexican insurer. U.S. and Canadian insurers cannot provide the liability coverage required under Mexican law.
But simply having a policy doesn’t necessarily mean you have the protection you think you do. From inadequate liability limits to legal assistance and bond coverage, what’s included in your policy can matter enormously after an accident.
We asked Federico Ransom of Ransom Becker, a bilingual Mexico insurance specialist, about some of the most common – and potentially costly – car insurance mistakes he sees drivers make in Mexico.
Here are 8 mistakes worth checking before your next drive.
#1 Buying the Cheapest Liability Coverage You Can Find
Meeting a minimum requirement and being adequately protected are two very different things.
Liability insurance pays covered damages you cause to other people and their property, up to the limits of your policy.
A fender bender is one thing.
Hitting an expensive vehicle or causing an accident where several people are injured can become costly.
The financial stakes can be considerably higher when an accident results in a death.
“Under Mexican liability law, compensation can be calculated using a state-based formula and funeral expenses for each person killed, and the amount can vary significantly depending on the state where the accident occurs,” explains Ransom.
That’s one reason carrying only the minimum liability limit can leave you dangerously underinsured after a serious accident.
Ransom recommends carrying at least MX$6 million in liability coverage rather than automatically choosing the minimum available.
#2 Overlooking Legal Assistance and Bond Coverage
A serious accident in Mexico can become a legal matter, not just an insurance claim.
Depending on the circumstances and the state where the accident occurs, if an accident involves injuries, you could be detained while authorities determine responsibility and the financial obligations are addressed.
“This is why legal assistance and bond coverage are so important,” says Ransom. “You want to know that, if something serious happens, you have an attorney who can help you through the process.”
Legal assistance can provide access to an attorney, while bond coverage can help with the financial requirements for your release when the circumstances are covered by your policy.
This can be particularly important if you don’t speak Spanish or aren’t familiar with the Mexican legal system.
Check whether your policy includes legal assistance and bond coverage, what the limits are, and exactly who you should call if you’re detained after an accident.
#3 Assuming Your U.S. or Canadian Insurance Has You Covered in Mexico
If you drive a U.S. or Canadian-plated vehicle in Mexico, your home-country liability insurance does not satisfy Mexico’s mandatory third-party liability requirement.
That coverage must be issued by a licensed Mexican insurer.
Your U.S. or Canadian policy may still provide certain coverage while your vehicle is in Mexico, but that depends entirely on the policy.
Some policies provide limited coverage for your own vehicle, belongings, or medical expenses, while some U.S. policies cover only the first 25 miles across the border or restrict coverage to infrequent visits.
None of that replaces the Mexican third-party liability coverage you’re required to carry.
Another potentially expensive mistake is buying liability-only Mexican coverage because you assume your U.S. or Canadian policy will still cover damage to your own vehicle.
That may not be the case.
Before choosing a policy, confirm what your home-country insurance covers while your vehicle is physically in Mexico and whether you need broader Mexican coverage to protect your own car.
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#4 Keeping Your Insurance Policy Only on Your Phone
A digital copy of your insurance policy may be convenient, but Ransom recommends keeping a printed copy in your vehicle.
“I always tell my clients to keep a printed copy in the glove compartment. It can save you the headache of a traffic officer asking for a paper copy when all you have is your phone,” says Ransom.
There’s another reason to keep it accessible.
If you’re injured and unable to contact your insurance company yourself, someone else can make the call on your behalf.
Keep your printed policy, vehicle registration, insurance company’s claims number, and agent’s contact information together in your vehicle.
#5 Making a Side Deal with the Other Driver
After an accident, the other driver may offer you cash to settle the damage on the spot or to keep you from filing an insurance claim.
“It may seem like an easy solution, but don’t accept money or make an agreement with the other driver,” warns Ransom. “If you do, your insurance company will decline your claim.”
You could also accept an amount that seems reasonable at the scene, only to discover later that the actual repair costs much more.
Call your insurance company and let the adjuster handle the claim.
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#6 Assuming Rental Car Coverage Is Automatically Included
If your car is damaged in an accident and spends days or weeks in the body shop, you may need a rental car while you wait.
Don’t assume your insurance company will pick up the bill.
Check whether rental car coverage is included in your policy. If it isn’t, you may need to specifically add it.
If you only have one vehicle, this is worth checking before you need it.
#7 Not Having Your Driver’s License and Documents with You
If you’re in an accident and can’t produce a valid driver’s license, the police can fine you, and your insurance adjuster can decline your claim until you prove you have one.
“The claim isn’t permanently declined. It’s temporarily declined until you can prove that you have a valid license,” explains Ransom. “And your license doesn’t have to be Mexican. A valid foreign driver’s license is accepted for insurance purposes as long as it hasn’t expired.”
Ransom recommends keeping the following information available in your vehicle and making sure your documents are current:
- Valid driver’s license
- Vehicle registration
- Printed insurance policy
- Insurance company’s claims number
- Insurance agent or broker’s contact information
#8 Assuming the Other Driver Has Insurance
“Estimates are that only 1 in 3 vehicles in Mexico is insured,” says Ransom.
That means if another driver causes an accident, there’s a good chance they may not have insurance to cover the damage or have the money to pay for repairs or medical expenses out-of-pocket.
Those costs can add up quickly.
A serious accident can involve medical treatment for you or your passengers, major vehicle damage, or even a totaled car.
With no insurer on the other side to pay the claim, your own coverage becomes especially important.
Ask what your policy covers if you’re hit by an uninsured driver, including damage to your vehicle and medical expenses for you and your passengers.
Make Sure You’re Covered for the Unexpected
Federico Ransom of Ransom Becker is a bilingual Mexican insurance broker who can help you understand your coverage and compare car insurance options from multiple insurers for Mexican-plated and U.S. or Canadian-plated vehicles.
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