If you travel up the border and into Canada, you don't need to purchase additional auto insurance coverage, but is it the same if you travel south to Mexico? The answer is not as straightforward as you might think for the 150,000 Americans who cross the border each and every day. Not only do you need to speak with your auto insurance agent regarding the details of your policy, but you also need to understand the laws in Mexico.
The Amount of Physical Damage Coverage Your Auto Insurance Policy Offers
Each auto insurance plan offers various amounts of coverage for physical damage to the insured car calculated based on the amount of miles that you are driving away from the border. There are some auto insurance policies with coverage extending throughout Mexico. This type of auto insurance coverage will protect your own vehicle should it get damaged.
For example, if you scrape your car while making a turn or if a flying pebble on the highway dings the side of your vehicle, your auto insurance plan will cover the cost for fixing the repairs. Consider the maximum worth of damage covered as well, as the amount of coverage you have may not be sufficient to fully cover the repairs for severe fender benders.
Understanding Mexico's Laws and Liability Coverage
Although your auto insurance plan may offer physical damage coverage, it is not enough. You will definitely have to purchase liability coverage; however, if the auto insurance plans offer physical damage coverage, you will be paying significantly less. The Mexican government has legislated a cap to the maximum amount of compensation awardable. You need to have sufficient liability coverage to cover the maximum compensation awardable in the local area you are in because Mexico requires you to provide proof of financial responsibility.
Liability coverage in the U.S. cannot provide the proof needed. Since 2013, the cap has been 5000 days multiplied by the local Mexico minimum wage. If you do not purchase liability coverage in Mexico and are found to be at-fault for an accident, you can expect to be thrown in jail and for your car to get impounded. Some liability coverage also include travel assistance, medical expense coverage and legal assistance.
Determining Whether You Should Cancel or Suspend Your U.S. Auto Insurance Policy
There is a time limit to the amount of physical damage coverage your auto insurance plan offers. If you plan on staying in Mexico for prolonged periods of time, chances are you will need to purchase separate auto insurance when you arrive at Mexico, especially if your auto insurance plan does not offer physical damage coverage in Mexico. If this is the case, you will be paying for two insurance plans – one in America and one in Mexico. Cancelling or suspending your auto insurance plan may be best if that's the case.
If you are only travelling for short periods of time and do not want to risk facing additional complications and problems when attempting to reinstate your auto insurance in the U.S., consider dropping your insurance to the minimum coverage level possible. This will reduce your premiums and make your auto insurance more affordable.
Conclusion
If you plan on travelling to Mexico, understanding the type of coverage your auto insurance offers, the location in Mexico you will be in and the amount of time you will be spending in Mexico will affect the amount of coverage you need. Speak with an auto insurance company to determine the type of coverage you already have and what you can do with your auto insurance plan in the U.S. to make it more affordable during the time you're away.
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