Mexican and American RV/Auto Insurance

Automobile (and RV) liability insurance policies issued by American companies are not recognized in Mexico, even if those policies include “Mexican” coverage riders. Under Mexican law, however, drivers must either carry automobile liability insurance or be able to demonstrate financial responsibility—in cash. Thus, unless you plan on carrying lots of cash, you will have to purchase at least liability insurance from a Mexican company.

Such coverage is readily available on-line or at agencies near the border and it is fairly inexpensive. A $50,000 liability-only policy, including $2,000-per-person/$10,000-per-accident medical coverage, runs about $100 for six months and less than $150 for a full year, based on an internet search conducted in February 2006. A $100,000 liability policy, with $5,000/ $25,000 medical coverage, will cost around $145 for six months and $200 for a full year. Some of these policies may also include legal and roadside assistance.

If you do not have Mexican liability insurance and are involved in an accident, you are almost certain to spend some time in jail until all parties are satisfied that responsibility has been assigned and adequate financial satisfaction received. There may also be criminal liability assigned if the injuries or damages are serious. (Note: Motor vehicle insurance is invalid in Mexico if you are found to be under the influence of alcohol or drugs.)

   If your RV (or auto) is financed, Mexican border officials may require written authorization from your lender allowing you to take the vehicle into Mexico. Lenders, in turn, will require adequate collision and comprehensive insurance coverage in Mexico, naming them as a lien-holder, as a condition of such authorization.

A few U.S. insurers extend RV collision and comprehensive coverage to travel in Mexico, as long as you purchase Mexican liability insurance, but many do not and some restrict coverage to 20-50 miles from the border. It is important for you to verify if your domestic carrier will extend collision and comp coverage while you are in Mexico. Further, 5th Wheeler’s should verify that a policy offering collision and comprehensive coverage in Mexico covers both the RV and the tow vehicle.

In early 2006, full coverage insurance for a motorhome with a value (or loan balance) of $165,000 costs about $1200 for six months, including $50,000 liability, collision and comprehensive coverage. (Increasing liability coverage to $100,000 adds about $50.) For daily coverage at the time this article was prepared, however, rates for a 12-day trip were $553 for a $165,000 RV and $50,000 liability.

When purchasing full coverage insurance, it is also important to determine if the policy provides for a flat-rate or percentage deductible. (Some lenders will require a flat rate deductible, usually $500 for collision and $1000 for theft.) Percentage-based deductibles range from 2% to 5% of base value for collision and 5% to 10% for theft. For a $165,000 RV, that means deductibles of $8250 to $16,500! That’s a pretty significant exposure for an “insured” driver.

Other questions to consider include whether or not necessary collision and/or comprehensive repair costs are based on Mexican or U.S. labor rates and if a disabled vehicle can be returned to the U.S. for repairs.

Some RVer’s choose to take the risk and drive in Mexico without collision and comprehensive insurance protection. This is, of course, a personal choice (assuming the vehicle is not subject to a loan). It seems important, however, to remember that vehicle collisions are called “accidents” precisely because they are unplanned. The odds of having a collision or major comprehensive claim while in Mexico may not be any greater than while driving in some parts of the U.S., but there is always a risk. Given the condition of many Mexican roads, narrow streets in towns, and the driving habits of truck drivers and other natives, some might regard going without full insurance in Mexico as equivalent to living in New Orleans without flood insurance.

If you have sufficient lead time before your trip into Mexico, consider switching your coverage to a U.S. company that extends collision and comprehensive coverage while your vehicle is in Mexico. Although the annual premiums can be somewhat higher, odds are that the net savings for coverage in Mexico will be substantial.

One other strategy for reducing insurance costs while in Mexico is to leave your toad vehicle behind, assuming that you will be traveling in areas where taxis and other forms of public transportation are available. Although the difference in cost of liability coverage for one versus two vehicles is insignificant, collision and comprehensive coverage for the value of the second vehicle can be a significant factor.

For more information on travel to Mexico, check out one or more of the following web sites:

       MEXonline.com LLC, a San Diego, CA based internet guide - www.mexonline.com

       U.S. Dept. of State Tips for Travelers –www.state.gov.

       Mexico Tourism Board - www.visitmexico.com.

    And, of course, check out one of the many on-line sources for Mexican insurance, including: www.automexicaninsurance.com, www.sanbornsinsurance.com,  www.drivemex.com, and www.mexican-autoinsurance.com.