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American Compared to Mexican Auto Insurance

Fri, 19 Jul 2019 01:16:42 +0000

The Difference is Data

When comparing insurance in the United States to Mexican Insurance, there are more similarities than differences.  The primary difference is how insurance is rated.  The U.S. has been good at tracking data on citizens, vehicles, safety history, emissions history, education levels, and job titles.

In Mexico, only about 30% of Mexican citizens have insurance.   The entire country is no-fault, meaning that your car damage can be covered regardless of fault if you have full coverage insurance.

Regulations Differences

In the U.S., each state has different rules related to minimum coverage and at-fault regulations. Michigan, for example, is a no-fault state. So regardless of fault, your insurance policy covers damage to your car.

Every nation must have a body for regulating the insurance industry. Mexico’s insurance and reinsurance industry is under the State Ministry of the Treasury and Public Credit (SHCP).  The federal, national insurance, and bonding commission within the ministry licenses and supervises the activities of insurance companies.

In the United States, the industry is regulated by individual states.  Each state enforces regulatory laws through regulations, rules, and laws enacted by their state legislatures.  There are no national laws or body that regulates the industry. However, federal laws and courts play a role in the adjudication of insurance matters.

In the U.S., insurance prices are tightly controlled and regulated at State Levels. Each of the 50 states in the United States has a Department of Insurance with its own elected commissioner. Mexico, on the other hand, regulates insurance at the federal level. Some Mexican auto insurance is very good, comparable to, or even superior to, what you have back home. Some policies are poorer in quality, and others are downright terrible.

The best way to tell the difference is to do your homework. A trip to Mexico, at least in your car, should not be a spur-of-the-moment decision. If you have time to plan your adventure, you have time to research Mexican auto insurance.

American Car Insurance Rating Compared to Mexican Car Insurance Rating

United States rating factors

In the United States, insurance companies have a massive database, and they know EVERYTHING about you. The calculation takes into account your years of driving experience. They give discounts for where you live and park the car at night. They give discounts if you are a professional and know your driving history.  More examples of rating factors in the United States include:

  • Where we work
  • How long we work there
  • Our educational background
  • Background of our parents
  • How long we’ve been driving
  • How long has it been since we had an accident?
  • Have we ever had a DUI?
  • It continues!

USA Insurance Key Factors:

  • The driver is rated based on education, age, experience, profession, accident history, and vehicle and location
  • Cancellation and modifications happen with pro-rate at any time

Mexico Tourist Automobile Rating Factors

Without the rating factors that include driving history and education level, only the car value and location of the vehicle are considered.  Some additional factors include the driver’s age, the purpose of the trip, etc. (high miles = higher risk, so expect business use to form a surcharge in Mexico Insurance.

Prorate vs. Shortrate

Auto insurance policies in the United States transfer easily to a new or different car. If you sell the vehicle, it can be terminated after prorate calculations are applied.  A hefty cancellation fee is almost always, but you can expect a refund.

With tourist auto insurance, policies earn very quickly (30 days and annual policy have no refund). Once a policy is fully “earned,” meaning no refund is available, the procedure can be transferred to a new vehicle owner. Still, there is nothing due to the policyholder.

In summary, the Mexico Insurance Key Differences:

  • Rate the car, not the driver
  • Rate the location traveling in Mexico
  • Quickly earned period (30-34 days) is not “prorated.”
  • Daily insurance doesn’t exist in the U.S.