Nearly every state in the U.S. requires its registered drivers to carry auto insurance. The policies you sell will cover your clients both within their own state’s borders and when they travel to other states. However, the same does not apply if they plan to travel south of the border.
Border states experience incalculable amounts of cross-border traffic between the U.S. and Mexico. It is one of the busiest international borders in the world. However, when American drivers cross into Mexico, their stateside auto coverage becomes void. As their agent, it is your job to still help them maintain appropriate benefits, which is why you must work proactively to ensure they have the right Mexican auto insurance.
Here’s how Mexican auto insurance works, and what you can do to help your clients get the coverage that is right for them.
Why Does U.S. Insurance Not Work in Mexico?
It sounds basic, but the United States and Mexico are sovereign countries, and each has its own legal jurisdiction and insurance codes. Therefore, Mexican law addresses car insurance and liabilities in a different way from the U.S.
As a result, American insurance policies are not compatible with Mexican law, and most specifically exclude coverage for travel in Mexico. Therefore, when an American driver crosses the border into Mexico, their U.S. benefits will not cover them. American insurance companies are not licensed to sell coverage in Mexico. Travelers therefore will need to buy Mexican auto insurance if they want to maintain coverage. It will be instrumental in helping them stay secure behind the wheel.
Do Drivers Have to Buy Mexican Auto Insurance?
Just like most of the U.S., Mexican federal law requires that most drivers carry auto insurance. Foreign drivers are not exempt from this law. Therefore, policyholders with intent to travel across the border will need to have Mexican auto insurance in place at the time of crossing. Policies are provided by reputable Mexican insurers, and many offer bi-lingual and convenient policy services.
Mexico, like most U.S. states, uses an at-fault insurance system. This means that if a driver causes an accident, they will have to pay for the damage done to affected third parties, like other drivers. As a result, they are required to carry liability insurance. It will cover the driver for the costs of compensating someone else for both bodily injuries and property damage.
Plus, policies can also provide legal assistance coverage alongside a driver’s liability benefits. In Mexico, car wrecks are considered criminal matters. Therefore, drivers will face detention until they can prove they have the means to pay for the damage they caused. This might mean time in jail, though not in all cases. Drivers will also have to appear before a judge, who will determine fault in the case. During this time, their auto insurance benefits can help them pay for bail bond, a lawyer and other assistance as necessary.
How Can I Structure my Coverage to my Advantage?
A liability insurance policy is only one of many benefits that Mexican auto insurance can offer drivers. Just like in the U.S., they can add benefits to their plans to further enhance their ability to afford the costs of accidents or other behind-the-wheel hazards.
Some of these benefits will look familiar to you. Others, however, will be unique to Mexican auto policies, but can still be beneficial to American travelers.
- Physical Damage Insurance: This coverage helps you pay for damage to your car from wrecks, vandalism, theft and certain other perils. Most Mexican auto policies do not split your coverage between collision and comprehensive coverage, the way American policies do.
- Gap Insurance: If your car is totaled in a wreck, and your auto insurance settlement does not cover the value of your car loan, then this coverage can help you pay off that remaining value.
- Uninsured Motorist Deductible Waivers: If you are not at-fault for an accident but are the victim of a hit-and-run or of a driver who doesn’t have insurance, then your physical damage insurance will cover the losses. However, the deductible is waived in these cases.
- U.S. Repair Options: If you want to have your vehicle repaired in the United States, then your Mexican policy can match the appropriate labor costs.
- Medical Payments Insurance: If you or your passengers get hurt in a wreck, then this coverage can pay for the resulting medical bills.
- Roadside Assistance Coverage: You might experience a breakdown while on your trip, and if you have this coverage, then you will be able to have a repairman or tow truck dispatched to you.
- Travel Assistance Coverage: After a wreck, your travel plans might be interrupted. This coverage can help you pay for hotels, return flights or rental cars to help you get back home.
Keep in mind, alongside your auto insurance, you will need to obtain a Mexican Vehicle Import Permit (VIP) if you plan to travel outside of the free zone that runs approximately 25 miles past the border.
Also Read: Offering Mexico Auto Insurance to Clients