ABCs of purchasing insurance in Mexico

One of the biggest worries foreigners have regarding insurance in Mexico is not being able to understand all the details when making a claim – largely because of the language barrier. That's the view of Roberto Castellanos of Mariner's Insurance Mexico, who recently gave a presentation on the differences between Mexican and U.S. insurance at the Lake Chapala Society.

While the insurance process is more complicated in the United States, because of greater legal technicalities, Castellanos says the paperwork involved in making a claim in Mexico is often not so simple because "one needs to prove many things and show more documents."

"Nonetheless, if you're working with major companies in Mexico, you can be guaranteed the same reliability as in the U.S. and Canada," he adds in fluent English.

One advantage of buying insurance in Mexico, Castellanos says, is that many policies are often less expensive: "Health insurance can be 50 to 60 percent cheaper and auto insurance 20 percent." If you're in an auto accident in Mexico, the insurance follow-up not quite the same as north-of-the-border, Castellanos told a good-sized audience in Chapala last month.

In the United States and Canada, the common law is based on the British code: innocent until proven guilty. And your policy insures the driver and the vehicle. States and provinces handle the insurance regulations.

In Mexico, the Napoleonic Code is in play: guilty until proven innocent. In Mexico adjusters and traffic cops go the the scene of the accident. If no resolution is forthcoming between the parties, both may be detained in the case of injury or damage to public property. It is the vehicle, not the driver which is insured here – so make sure if you drive someone else's car it's insured.

But fear not. In the event of your being arrested, the adjuster will post your bail bond and, if legal action is needed, a lawyer is included in the policy and hired by the insurance company.

Under Mexican law, your insurance company must be registered in Mexico for your policy to be valid.

Under state laws you are required to have liability insurance on your auto if you live in Jalisco, Nuevo Leon or Mexico City but you are legally responsible for any damage to person or property anywhere in the nation.

This means that if a Nayarit-plated car is driven in Jalisco, it must have insurance, Castellanos stresses.

If any of the above applies to you, but the thought of trying to figure out an insurance policy in Spanish leaves you cold, then read on.

Autos

There are three types of auto insurance: Resident Auto (Mexican license plates); Fronterizo (Border Zone: 25 miles inside the border, all of Baja California and Sonora as far as San Carlos); and Tourist Auto (drivers must carry a license from the plated country and an FM-2 or FM-3 visa).

When looking at a Mexican auto insurance policy there are generally two pages. The first page includes the details of the person or company paying for the insurance and the covered vehicle, as well as the coverage dates and the policy number. The second page specifies the type of coverage included (cobertura amparada) and the sum it is insured for (suma asegurada) for each type, the deductible and the prima, or cost of the insurance coverage.

Some of the options available include: market value for new brand models, an agreed value offered by some companies, a GPS tracking device installed – non-deductible for theft, insured liability extension: driving other autos – no rentals and zero deductible.

Homes/Personal

The basic homeowners policy in Mexico covers fire and lightning damage – anything else is additional coverage, Castellanos says.

Homeowners insurance policies in Mexico are multiline polices that must have at least three lines of insurance: fire for building and contents; liability; and miscellaneous (glass breakage, theft, money and securities, etc).

All policies are for replacement value only. Mariners is the only company in Mexico that presently offers market value for condominiums.

Castellanos points out that Americans and Canadians have more risk and management culture than Mexicans, so they are often concerned about coverage that normally people in Mexico are not concerned with.

"We know the risks they are facing in different locations so we can suggest coverage for those homes depending where they are. For example, there's less risk of hurricane damage in Guadalajara than in Puerto Vallarta. If you are in a gated community the risk of theft and robbery is less than if you aren't."

Home insurance options can include: foundations, covered under a special agreement and not generally part of an ordinary policy; outdoor construction; catastrophic (mudslides, hurricanes, floods by rain, ocean surges, stormy winds and earthquakes), based on the area in which the home is located. Emergency services that may be covered include plumbing, electricity, locksmith fees, and even medical assistance.

Health

As up north, there are many possibilities of health insurance coverage: HMOs and PPOs, private hospitals and doctors, nationwide coverage, major and/or minor medical. Some 30 underwriters carry major medical insurance (gastos medicos mayores) in Mexico and seven companies in the three main cities offer minor medical coverage (gastos medicos menores). A few companies offer a combination of major and minor medical coverage, others offer specific payments for certain illnesses.

Minor medical is generally set up for employees using a payroll deduction. It offers discounts with participating hospital, clinics, labs and doctors. There is no age limit and prescriptions are not included.

Preexisting conditions are excluded and a medical exam may be required. Previously, most companies allowed those under 64 years of age to apply but now more forms are accepting applicants up to 74 years old and above. Very few have no age limit but Castellanos notes that in Mexico it is possible for someone aged over 65 years to find complete health insurance coverage from 80 to 100 dollars month.

Deductible can be selected from zero up to 5,000 dollars. Coinsurance is normally 10 percent. Although those insured must be within the hospital and doctors network, Castellanos says most companies are often willing to incorporate new doctors into their networks if they have been working with their clients for some time.

Hospital levels offered on policies are important. A-level hospitals are the best, B are just OK, but don't go to C-level hospitals, according to Castellanos.

But he says it's important to ensure that the hospitals offered in policies are actually close to where you live, otherwise you might be paying an unnecessarily high premium for facilities that one would not be able use easily.

Emergencies abroad are normally offered on a reimbursement basis and coverage abroad is limited. Medevac insurance (by ambulance and private jet) coverage runs about 300 dollars per year.

INSURANCE FACTS & FIGURES

- In the United States, 3,900 insurance companies compete for your business; in Mexico 77 and in Canada just 50.

- Of the 77 in Mexico, 40 handle life policies, 30 health, 31 auto and 42 commercial lines.

- Major worldwide insurance groups represented in Mexico include: ACE, AXA, CHARTIS, CHUBB, GENERALI, MAPFRE, METLIFE, RSA, QBE, TOKIO MARINE AND ZURICH among others.

- South of the border all insurance companies are regulated on a federal basis whereas in the United states, the states are are in the regulator's seat.

- The National Commission of Insurance and Surety (CNSF), under the Secretariat of Hacienda, is the regulatory body which makes sure that insurance companies are solvent. Each insurance agency must have a valid CNSF number.

- There are 31,970 insurance agents in Mexico.

- Each agent must renew their license every three years.

- Each agent must carry a professional liability (errors and omissions) insurance policy.

From all of us in Mariners Insurance Mexico.