One of the common assumptions American and Canadian visitors make when they drive to Mexico with their car is that their home-issued auto insurance policy will cover them here.  It doesn’t, and it can’t—this article explains why.

Some auto insurance policies might contain wording that leads you to believe that you are covered in Mexico, but this cover is limited to damage to your own vehicle and certain things you may be carrying inside your car.

The most important aspect of an auto insurance policy when you’re driving in Mexico is third-party liability. By law, US and Canadian insurers can’t provide this: liability coverage must be underwritten by a Mexican insurance company.  In addition to the underwriting provision, liability laws vary by country and so an insurance policy needs to be specially formed to be legally valid under the nuances of local law.

Third party liability covers any losses your actions may cause to others, so if you damage another person’s vehicle (or their property), or injure another person in an accident, you need a liability insurance policy that will cover your financial responsibility. If you don’t have it, you will be arrested and jailed pending complex legal procedures and negotiations and ultimately until you or your loved ones come up with the money to compensate those to whom you have caused a loss.

How much liability insurance do you need in Mexico? While no one expects to be involved in an accident—and far less a serious one—when arranging coverage, it’s worth considering the worst-case scenario: that you accidentally cause the death of another person as a result of a vehicle accident.  Here in Mexico you can be responsible for a small fortune if you unintentionally cause the death of another motorist, and reputable insurance brokers suggest that you have no less than US$300,000 in liability insurance and they will usually recommend US$500,000 for complete peace of mind.

There are other factors besides liability to consider when you are arranging your auto insurance.  The three most important aspects to consider when choosing a policy are:

Legal Representation: If you’re involved in a serious road accident in Mexico, it’s common for those involved to be arrested until the situation is assessed, fault is determined, and financial responsibility is assigned. Due to this process, the legal representation which better policies offer is essential: this will provide you with local legal support, deal with the paperwork and procedures, post a bail-bond, and get you released as soon as practicable. The legal team will also negotiate on your behalf if fault and responsibility is assigned to you.

Medical Cover: If people are injured in an accident, will their medical payments be covered and to what limit per person? Medical coverage on auto policies vary and you’ll need to compare the choices and make certain that you have an adequate amount of coverage, per person and in total.

Roadside Assistance: If you break-down, or in the event of a minor accident which leaves your car damaged but readily repairable, a roadside travel assistance plan can be a great benefit. They can be purchased as part of an auto insurance policy and offer very practical help in otherwise tricky circumstances.  In the event of a breakdown or minor accident which leaves you stuck, help with things like gas delivery, a flat tire, a locksmith, or a tow truck to a nearby garage for essential repairs can be a phone call away.