When it comes to Mexico Car Insurance; couple things to look for!
“Buy what you know” is an old adage used by stock traders. While this advice is valuable in many walks of life, the complexities of insurance make “knowing” what you are “buying” difficult (there is a reason all your online insurance companies provide call center support). This is particularly true when you add an element of buying insurance in a different country. Buying Mexico Auto Insurance introduces additional complications due to the potential differences in the legal system, different mandated coverage, and coverage quarks and oddities. So what should you look for when purchasing Mexico Auto Insurance? Here are 4 tips when purchasing Mexico Car Insurance.
- Is the company rated? While the rating industry has been scrutinized for their role in the 2008 economic collapse, they are still the best method to tell if a company is financially sound and able to pay for your claim. All insurance is, is simply a promise. In return for your premium we promise to pay for a claim that occurs during the policy period. If the company is not financially strong enough to do so, then it is the equivalent of flushing your cash down the toilet. A good rating doesn’t guarantee great service, but indicates the ability to pay for the claim. Ratings are similar to grades in school, and an A rated carrier is the most financially sound, with other level such as B and C also existing. Most carriers carry an A rating. Given that Mexico does not rely on rating as much as we do in the states, some Mexican Insurance carriers carry a rating, others are part of rated insurance groups, but others still, carry no rating. Traditionally, in the insurance market place AM Best is the preferred rating company. So ask your agent if your company is rated with AM Best. If the company is at least part of an A rated then it is ok to go ahead and purchase, if they carry no rating at all, be wary & ask questions.
- What limits are you purchasing? What do I mean? Insurance has limits. Are the limits going to cover your needs? Liability insurance should cover all the damage you may cause to others, include bodily injury and property damage. Low limits such as 15/30/10 don’t provide much coverage and we advise you contemplate purchasing more. There is no question that the legal system in Mexico is different, and therefore liability claims are typically lower than in the US. Consider this; a combined single limit (CSL) of 50,000 gets wiped out pretty quickly if you hit that Escalade in front of you, and that doesn’t even consider the injuries the passengers might incur. So even though you might be in Mexico, ensure your Mexico Insurance policy has sufficient limits to cover any potential claims. We recommend no less than $300,000k which is also the amount that companies like GMAC Finance and Ford Motor Credit Corp require you to carry & the republic of Mexico.
- We have already covered the liability portion of the policy, but don’t neglect physical damage coverage on your Mexico Auto policy. It is incredibly important that you ensure your own assets and even more important to note that US policies are different than typical American policies. Mexican insurance policies are “named peril” policies; which means if it’s not listed it’s not covered. So make sure you get a LONG list of named perils. Some of these should include Collision, theft, fire, lightning, partial theft, and vandalism. These are typically insured by endorsement, which means it costs a little extra, but in the event of a claim the coverage will be well worth it.
- Finally, you must ask yourself a question: where do I want my vehicle fixed in the event that you have a claim in Mexico. If your answer is in the US, then you need to be aware of how your Mexico Auto insurance company is going to handle that. Companies prefer to work with their preferred partners (they get discounts). For Mexico Auto insurers, that is going to be in Mexico. As such, they build in “Mexican Labor Rates” when considering the rate. Many companies will allow you have your vehicle fixed in the US, but will only pay the Mexican labor rate. However, again, by endorsement many companies will increase the labor rate when the vehicle is fixed in the US. It still may not cover everything, but it will certainly lessen the pain come claims time. Asking your agent if endorsements are available is recommended.
For more information on Car Insurance in Mexico visit www.WestCoastRi.com
October 6, 2015