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For
over 15 years we have had the opportunity to help tourists,
property owners, and businesspersons who drive, own homes, or
operate businesses or subsidiaries in Mexico to properly protect
their assets south of the border. It is ironic that most of
us purchase our insurance coverage in the US with great care,
yet use a lesser standard of care when purchasing coverage for
Mexico.
When
purchasing any type of insurance for Mexico, buyers should analyze
a number of issues including:
Are
the US Broker and Mexican Insurer they represent reputable
and in sound financial condition?
Do
I need to purchase coverage from a Mexican Insurer?
What
are the differences between a US and Mexico Insurance policy?
What
type of insurance do I need, and at what limits?
Is
the U.S. Broker Reputable?
Over
100 U.S. insurance agents and brokers offer insurance for Mexico.
Logically, a great number of these agents are located close
to the border. Some of the important distinctions to keep in
mind when choosing an agent or broker are:
Does
the agent have experience in the Mexico market and Does the
agent have experience in the US market? It is important that
the agent you work with has a vast knowledge of the difference
between US and Mexico insurance and can counsel you regarding
the potential gaps in coverage among these policies. Purchasers
of insurance for Mexico should have confidence that they will
receive professional, knowledgeable service when they need the
coverage to respond or in the event of a coverage dispute.
Most
reputable insurance agents carry Errors and Omissions insurance
to protect themselves, and their customers, when legitimate
mistakes are made. Ask your agent if he or she carries Errors
and Omissions insurance; it will protect both you and your agent
in the event of a coverage dispute.
Is
the Mexican Insurance Company Reputable?
As
the global economic environment continues in a state of uncertainty,
it may be more important than ever to purchase insurance for
Mexico from a financially strong insurer. No matter how reputable
your agent or broker, if they are placing your insurance with
a troubled insurer you could be in for some unpleasant surprises
in the event of a claim. There are over 50 insurance companies
in Mexico; similar to the U.S., "some are good and some
are bad".
According
to the 2002 report of the Mexican Insurance Commission (Comision
Nacional de Seguros y Fianzas) only 2 Mexican Insurance companies
write over
$
400 Million US in non-life premium (life insurance excluded).
These companies are Grupo Nacional Provincial and Seguros Comercial
America. The next three largest companies write between $ 100
million US and $ 200 million US in premium. Each of the remaining
insurers writes less than $ 70 million in premium, (with quite
a few writing less that $ 10 million) including some companies
quite familiar to purchasers of Mexico Insurance.
Although
some US insurers have purchased ownership interests in Mexican
Companies, these Mexican companies operate independently of
the US parent company.
Ask
your agent about the size and financial strength of the Insurance
companies they use; in the event of further economic problems
and/or the devaluation of the Peso coupled with a few natural
disasters such as a hurricane or flood, how will the insurer
fare? (for a list of Mexico insurers ranked by written premium,
please feel free to call our office at 1-888-INS-4-MEX.)
Why
do I need to purchase coverage from a Mexican insurer?
Mexico
law mandates that only insurance companies which are licensed
and admitted in Mexico can provide "civil liability"
coverage that is recognized by the judicial system of Mexico.
Although a few US insurance companies will extend physical damage
coverage (collision, comprehensive) on your auto while you are
driving in Mexico, they cannot and do not provide Mexican liability.
Similarly,
Mexican law requires that any property located in Mexico be
insured by an authorized, admitted Mexican company. Some US
companies will extend Property coverage to large commercial
projects in Mexico; however, for both homeowners and commercial
property owners both the underlying "fire" coverage
and the Mexican liability coverage must be purchased from a
Mexican insurer.
What
are the differences between us and Mexican coverages, and what
type of insurance and what limits do I need?
There
are some tremendous coverage differences between US and Mexican
Insurance policies, and far too many "minor" differences
to list here. Following are some of the major differences outlined
by type of insurance.
HOMEOWNERS
and COMMERCIAL PROPERTY-
While some Mexican companies offer "all risk" policies
and reasonable deductibles, others offer only "named perils"
policies with some strange deductible and coinsurance clauses.
Unlike US property insurance, coinsurance in Mexico is a "share
in the loss" penalty applied after the deductible has been
met. A coinsurance clause could effectively increase your deductible
to 10% to 20% (or more) of the property value.
Check
your policy carefully. The same insurance company may offer
all types of options, ranging from "All Risk" with
no coinsurance (the good) to "Named Perils" with a
coinsurance clause (the bad) to, well, we won't get into the
ugly.
LIABILITY
INSURANCE-
Liability in Mexico (liability coverage is a part of all homeowners,
auto, commercial property policies, etc.) is determined by Civil
Law, and is based on limits defined by Mexican Statute. Depending
on your view of things, this is either a brilliant system or
an antiquated one. I like it. Claims for pain and suffering
and emotional distress are virtually unheard of and claims for
Property Damage to Others and Bodily Injury to Others are settled
on an "actual loss" basis, guided by Statute.
Personal
Injury lawyers, as we know and love them in the US, do not exist
in Mexico. Therefore, liability limits and claims exceeding
$ 100,000 are rare. It is far more likely to have a "Property
Damage to Others" liability claim that approaches this
limit (damaging someone else's new Chevy Suburban, valued at
$ 55,000, for instance) than it is to have a "Bodily Injury
to Others" liability claim that approaches this limit (damaging
the occupants of the Suburban, for instance). This is almost
an exact opposite of how claims are settled in the US.
Keep
in mind that the liability insurance you purchase from a Mexican
insurer will not respond to claims or suits brought against
you in the United States or Canada for an "incident"
which occurred in Mexico. All liability claims under a Mexican
insurance policy must be brought and adjudicated in Mexico for
coverage to respond.
AUTOMOBILE
INSURANCE-
Automobile Insurance rates, coverages, limits and deductibles
vary greatly among Mexican companies. Some important items to
look for are:
Does
the insurer offer adequate liability limits, or does the policy
reduce the amount payable by using split limits?
Split
limits reduce the amount available for "Property Damage
to others". An ideal limit of insurance on a Mexican Auto
policy is $ 100,000 Combined Single Limit. Beware split limits
of $ 40/80/40, for example.
Does
the insurer automatically include Legal Aid and Travel Assistance?
These
"additional" coverages should be included in every
policy. They will help you tremendously in the event of an accident.
Without them, you could be on your own racking up legal bills
and huge headaches until your liability has been determined.
What
are the Physical Damage coverages and deductibles?
The
main exclusions on a Mexican auto policy are Vandalism and Partial
Theft.
The
policy is written on a "named perils" basis which
includes coverage for Collision, certain Meteorological Events,
Total Theft, Fire, and other perils. Deductibles are generally
a percentage of the value of the insured vehicle.
As
you can see from this brief summary, insurance in Mexico is
just as complex as it is in the US. Although all types of insurance
are available in Mexico, coverages, terms and conditions vary
greatly among insurers. For a free, no obligation coverage analysis
and quotation for either Personal or Commercial insurance in
Mexico, please contact Mexico Insurance Professionals at 1-888-INS-4-MEX
or e-mail us via our website
at www.MexPro.com.
Jim
Labelle earned the Certified Insurance Counselor designation,
a distinction held by less than 1% of all US insurance professionals,
in 1995. Jim has been involved in the US and Mexican Insurance
markets for over 15 years. Formerly a manager with one of the
world's largest insurance brokerages, Jim, his wife Andrea,
and their sons, Jimmy and Mathew, live in Flagstaff, Arizona.
Jim, who works in the Commercial Mexico unit, and Andrea, who
works in the Personal Mexico unit, travel to Mexico often to
visit colleagues at Mexico's largest insurance companies. Mexico
Insurance Professionals is a subsidiary of International Insurance
Group, Inc. Mexico Insurance Professionals, which represents
Mexico's largest and most respected insurers, has a dedicated
staff of licensed agents offering both Personal and Commercial
Insurance for Mexico and the United States to policyholders
throughout North America. Mexico Insurance Professionals can
be reached at 1-888-INS-4-MEX or via their website at http://www.MexPro.com/.
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