One of the most common complaints that I hear from tourists to Mexico is how the Mexican car rental companies pressured them to purchase expensive insurance packages that substantially increased the daily rental rate.
During the sales pitch, the representative for the car rental company will probably tell you that your existing car insurance back home does not provide any protection for cars rented abroad — a statement that is true in most cases. However, that doesn’t mean that you need to purchase the rental company’s most expensive insurance plan either.
The key to saving money while still reducing your liability in the event of an accident, is to be an educated consumer. That’s where this article comes in.
What the Law Requires You to Have
Mexican federal law requires all vehicles to have a minimum amount of insurance coverage to cover property damage and/or injuries to third parties. This coverage is referred to as el Seguro Obligatorio de Responsabilidad Civil Vehicular.
Here are the minimum levels of protection required by federal law:
Injury and/or Death: $100,000 MXN (approximately $5,263 USD)
Property Damage $50,000 MXN (approximately $2,631 USD)
Some jurisdictions have local laws that require more insurance than the federal law requires.
The good news is that the mandatory insurance is already included in the exhibited rental price. That’s because Mexico has an outstanding consumer protection law that mandates that the exhibited price for any product or service must be the total to be paid and already include all taxes, commissions, interest, insurance, or any other charge required to obtain it.
The bad news is that if you only opt for this basic level of protection, you’re still leaving yourself exposed to quite a bit of financial liability.
According to la Asociación Mexicana de Instituciones de Seguros (Association of Mexican Insurance Institutions), the average compensation for an accident involving a fatality can range from $300,000 MXN to $3,000,000 MXN. In U.S. dollars, that would roughly be $15,789 USD to $157,894 USD.
Coverage Through a Credit Card Company
Some credit card companies offer some level of rental car protection as a perk of membership — and to get you to use the card to pay for the rental.
Typically, this coverage is limited to collision damage and theft protection only, and does not include the two you really need when things go bad: personal injury and personal liability.
Before deciding to rely on your credit card company’s car rental protection, be sure to read the fine print and it wouldn’t hurt to speak to a customer service representative about the restrictions and conditions.
In order for your credit card protection to kick in, most credit card providers require the following:
- The name on the credit card is the primary renter
- The credit card holder declined the rental company’s collision damage waiver (CDW/LDW)
- The rental was paid in full with the card providing the protection.
One more thing. If you do choose to use your credit card for coverage, I highly recommend bringing a letter of proof of coverage from your credit card company. Some companies will even provide this letter in Spanish. You can obtain one by contacting your card’s customer service department.
If you rely solely on the mandatory insurance that comes with the rental car and the added protection your credit card provides, you will have to pay out of pocket for any emergency medical treatment you or your family members require — and that can get pricey.
Hopefully, you chose to purchase traveler’s insurance at the time you booked your trip. Typically, these plans cover emergency medical care and even include medical evacuation, if necessary.
I really can’t overstate the importance of springing for traveler’s insurance anytime you travel abroad. You don’t want your vacation experience to end up as a cautionary tale for future tourists.
Let’s Wrap This Up
One more thing. If you do decide to decline the rental car company’s insurance, don’t be surprised if they put a hold of up to $2,500 USD on your credit card. This practice is fairly common. The hold is removed when you return the vehicle.
Insurance is one of those things that might seem like a huge waste of money if you pay for it and don’t need it; however, if things go bad, chances are that you’ll wish you had as much coverage as possible.