What are the differences between Mexican Insurance and U.S. Car Insurance? We are all so accustomed to buying insurance in the United States that it has literally become part of our lives. In 1927 the rulers in Connecticut passed a mandatory auto insurance law, and ever since states have been adopting similar versions.
So, as an American citizen, it is likely that you were forced to buy insurance before you could drive! At the very least your Dad had a talk with you about how much his insurance premiums were going up because, yes YOU are being added to the family auto insurance policy. And he tried to use this as leverage to make you do your chores, and then some.
Have you heard of Big Data? Well, for all those years insurance companies have been collecting data, driving habits, accident history, loss ratios and risk figures. And nowadays these companies plugin to the Big Data to find out almost everything about you – not just what you share on Facebook, but your driving habits, your eating habits, spending habits, what you watch and who are your friends, where you work, family story…what your breakfast looked like this morning. They know everything about you. In the United States, you are given an insurance rate based on who you are….or I guess based on the data that the company has on you. You can list 20 vehicles on your policy, and they’ll ask you everything they don’t already know during the application process. But the auto insurance industry is smart – and they know exactly how risky YOU are to insure. If you have a DUI, or a criminal record, had no job or 10 jobs this year, fraud experience, lies on applications, etc – they know. You will pay more or less based on what they know.
In Mexico, it’s quite opposite. Big Data? Mexico doesn’t even have Baby Data … let alone Cloud-Based Ginormous Monster bits and bytes that control and monitor our lives. I’m not sure they have databases for that matter. If you’re lucky, or a politician … maybe a telenovela actress you might end up on a spreadsheet somewhere.
OK, maybe I’m exaggerating a little…
So back to the topic, what is the difference in Mexican Auto Insurance and insurance you purchase in the U.S.? DATA.
Only within the past few years have the Mexican States started to adopt mandatory insurance laws. And the insurance itself is on the vehicle as a risk (not the driver). Mexico has data on which vehicle is stolen most, and where it is stolen. But they don’t know about your 15 DUI’s in the past 5 years.
Because of this Mexican Insurance ties the policy coverage to the individual vehicle, and not the driver. You can add drivers to the policy, but never add cars. And you cannot get a discount because of your profession, you cannot swap vehicles mid-policy, you cannot change the vin or the value… Are you starting to see the difference?
When they sell a car in Mexico, they will advertise if the auto insurance is good for “another 6 months” because it has value. It’s similar to our vehicle registration in the U.S. which follows the car. If it’s registered until next July you’ll see it in the ad. The Mexican insurance will transfer with the car, and when you get a new car…that’s right, you need new auto insurance in Mexico.
In the U.S., if you get a new car they remove the old car of the driver’s policy, and pro-rate the discount and apply is to the pro-rated premium of the new car! It’s all done electronically in minutes.
How does this affect you? Well, you need to understand that when, as a tourist or even as a national citizen of Mexico, when you buy insurance on your car, it stays on that car until it’s time to renew. You have a limited time to cancel (34 days with mexinsurance.com) but even then, when you cancel the annual term the days that you used are converted to the daily rate – which can get pretty expensive. If you sell your car six months into the policy, you can charge the buyer additional for the insurance that will be transferred but you can’t get a refund from the Mexican insurance company.