RENTING A CAR IN MEXICO: CAR INSURANCE
Updated: Jun 7, 2021
Though Mexican roads have a less-than-stellar reputation, it’s not as bad as pop culture makes it seem. You not only cover more ground in less time, but you can drive to “off the beaten path” destinations that can’t otherwise be reached. And let’s face it, what better way to enjoy the coastline or jungle of Nayarit and Jalisco than by car? While driving in Mexico is quite straightforward, there’s a catch:
Mexican car insurance is not only necessary but mandatory.
But don’t let that deter you from driving in Mexico! Simply keep calm and read on to arm yourself and learn more about Mexican auto insurance and why you need it.
WHY YOU NEED MEXICAN CAR INSURANCE
Before you start thinking this is some money-grabbing scheme targeting foreigners, all drivers are required to have liability insurance. Unfortunately, the Mexican legal system is much less lenient if an accident occurs. When it comes to driving, Murphy’s Law is a very real threat, no matter how carefully you drive. If you get into a car accident while in Mexico, there may be trouble even if authorities can’t determine who’s at fault. Mexican authorities can legally arrest you and impound your car.
If you’re at fault, you’ll be detained until money matters are settled. Herein comes the car protection plans, which ensures that there’s a proper way to pay the damages. Therefore, mandatory car insurance is simply “proof of financial responsibility” to ensure that damages during an accident can be paid. Without insurance, paying for the damages will take longer to resolve and certainly put a damper on your day.
MANDATORY: THIRD PARTY INSURANCE (TI)
By law, the mandatory liability insurance is already included in the rental price! If you rent a car in Mexico with many franchised brands (Avis, Sixt, Budget etc), this mandatory insurance is probably will be explained to you at checkout. Don't let the other agencies hoodwink you into paying extra for this. It is the law of Mexico that it is included in the price.
What does it cover?
This is basic personal liability insurance that will satisfy the mandatory insurance requirement. In case of an accident, this covers personal injury claims or material damages you cause to the other driver. However, it does not cover injuries you may suffer or damage done to the rental car.
Protection coverage for the vehicle rented includes Third Party Liability with a maximum cover for personal injuries and material damages. Excluded from the protection is the use of the vehicle for the transport of dangerous goods. All protection as part of the rental contract will become void, in particular, if an unauthorized driver has used the vehicle or if the driver of the vehicle does not possess the required driver’s license at the time of the event giving rise to claim.
For better peace of mind, you can add more protection to your car rental.
In case you need some extra protection, you can also opt for additional protection options. These are not mandatory, so you are free to add them for your own peace of mind while driving through Mexico.
Supplemental liability insurance (SAI): Sometimes called additional liability insurance, this is not mandatory, though many rental companies will tell you (or let you assume) it is. Still, it's worth considering. The basic liability coverage is usually 50,000 pesos, or about $3,800, which won't go far in anything beyond a fender-bender. Cost: $13 per day.
Loss damage waiver (LDW): Also called collision damage waiver (CDW) or LDW/CDW. This is actually not insurance, but the rental agency's agreement to waive some of the cost of theft or any damage you inflict on the rental vehicle. This one requires some research and some careful thought. If your own auto policy or credit-card insurance benefits cover collision damage, you can pass on LDW/CDW, but keep some caveats in mind.
Personal Accident Protection: This is monetary compensation in the event of injury or death of the driver. If your health insurance doesn’t include ambulance, doctors, and hospital, you might find this useful.
Important to note:
You are responsible to the rental company for any loss or damage to the vehicle no matter what the cause is or who is at fault. You will be detained until money matters are settled, and if you lack liability coverage, your most memorable vacation sight could include the inside of a Mexican jail until you pay off your obligation. Before you decline LDW/CDW, verify that your auto policy or credit card insurance is valid for rentals in Mexico, and that it includes loss of use. Loss of use is important to understand, it is the loss of use of the car to the rental company while it gets repaired. While their car is undergoing repairs, they can't rent it and they can charge you for this loss of use. To collect on your credit-card insurance, you must use that card when you rent the car and when you pay the final bill. Carry proof of coverage with you, though rental companies don't always require it. You must also explicitly decline the offered insurance, which is not possible with companies such as Avis or National, which include LDW/CDW in their rates or bundle it with the required liability.
DRIVING TO MEXICO? YOU STILL NEED INSURANCE
Unfortunately, regardless of how comprehensive your US insurance policy is, it won’t cover you while driving in Mexico. Therefore, you must buy a separate insurance cover if you cross the border in your own car. This liability insurance must be purchased from a company that is licensed in Mexico. Please note that it must be specifically for foreign-plated cars. Luckily, this coverage can be purchased online through a trusted car insurance company before your trip. If you’re insured by one of the big car insurance players, they usually have partnerships with Mexican insurance companies that specialize in international car insurance policies. If you’re making a spontaneous trip, you can also purchase it at the border, but at a more expensive rate.
Ever wish your vacation lasted a few more weeks? What about years? We left the daily grind in California to live and work in Mexico and now help others do the same! From assistance with residency visas to property rentals and purchases to digital nomad networking, we are here to help people take that leap towards living in paradise. DM us your questions! Or follow us on Instagram for a peek at what it’s like to live the #mexicolife