Note: This article is an addition to an earlier article. Recently I had a unique opportunity to witness the outcome of a serious automobile accident in which an American tourist collided with a Mexican Army truck transporting soldiers. Several people were seriously injured and both vehicles were total loses. During the de-veiling of the otherwise hidden Mexican judicial process I was surprised to learn that even my own insurance which had an optional increased liability limit, would be woefully inadequate to cover this kind of claim. Mexico as you will learn is not the place to push the envelope on insurance coverage. A further surprise is that perhaps one percent of American and Canadian drivers understand that regular Mexican automobile liability insurance only guarantee that it will pay for a claim caused by its insured. The policy does not guarantee exactly when the claim will be covered and this is the focus of the article:

Note: To assure the privacy of the parties, I have omitted names, dates and location.

The American was driving a pickup truck towing a sport fishing boat on a trailer. The road was wet with rain. Suddenly he encountered an army truck in a curve. There was a collision and the army truck went off the shoulder and overturned spilling soldiers onto the ground. The police arrived and took the American driver to the regional police station. There, the American made several telephone calls: One to his family in the US, a second to the travel club he belonged to, and the third call to the toll-free exchange of the insurance company, which was allied with the travel club. The police explained that this was a most serious accident and that the army was demanding satisfaction for liability of the accident (whose fault of which was unclear). The man spent overnight in the jail and the next day learned that the army was also demanding the equivalent of twenty thousand dollars in compensation. Repeated calls to both the insurance company and travel club revealed that the insurance company was moving as fast as it could.

[At which point lies the rub. Over the years, Mexicans painfully learned that many foreigners will immediately bolt for the border if released from custody (wouldn't you? I would!). These days, Mexicans and foreigners alike are held in custody until such time as responsibility is determined and the defendant satisfies the plaintiff's claim. In Mexico, a claim is considered satisfied only when the plaintiff has payment in hand.]

After spending three days in jail the American learned to his horror that he was due to be moved to a more permanent facility — a state prison. He called everyone he knew trying to put pressure on his insurance company to expedite payment. Slowly the realization became clear however that all insurance companies require "enough" time to investigate claims and serious (high dollar) claims take longer.

Five days after the accident he found himself locked up in a Mexican State penitentiary. More frantic telephone calls to his family convinced them to mortgage their home for the twenty-one thousand dollar bail. After the money was obtained, his wife drove to Mexico and deposited the money with the officials. Her husband was released (Under such a circumstance, the Mexican Insurance Company should reimburse the man).

This episode came as a surprise to me. Over the years, I had assumed that Mexican Automobile Insurance had (some way) become more streamlined and responsive with regard to settling claims against foreigners. I had further assumed that the promise of bearing a policy with increased (optional) liability coverage would somehow be more assertive in assuring Mexican Authorities and a plaintiff that payment would indeed be guaranteed. In a nutshell all of my assumptions proved to be in error.

Mexican Automobile Insurance Is Above Board, But

There isn't an issue with the viability of Mexican Insurance coverage — companies are mandated by law to cover a valid claim. The issue is with the time taken to investigate a serious claim. In the US, a mere admission of liability by an insurance company usually will serve as proof of eventual payment; in Mexico, the word of the insurance company is not good enough — cold hard cash in the hands of the plaintiff is the only satisfaction that will get the defendant released from custody. This particular issue is the only thing to be concerned with regards to Mexican Liability Insurance coverage — with regards to collision and comprehensive coverage; Mexican Insurance payment policy is almost identical to US coverage (There are some stipulations about how and when claims must be made before exiting Mexico. Be sure to read your insurance policy and understand exactly what you need to do if involved in an accident in Mexico).

How To Insure That You Have A Get-Out-Of-Jail-Free Card

Most Mexican surplus line brokers (Agents who sell Mexican Auto Insurance in the US) offer a particular optional coverage with their liability policy:

Variously referred to as "Tour Aid, Legal Aid, Attorney Fees, Accident Bonding, etc" the optional coverage includes monies specified to pay for the immediate release of the insured. This coverage is provided by your American agent and not by your Mexican Insurance company. In addition to guaranteeing a specified amount (twenty-five thousand dollars, usually) the optional clause specifies assistance of an attorney to unravel any legal knots blocking your release. This service usually includes payment of modest fines and judicial fees. The optional clause is automatically invoked when either your Mexican Insurance Company determines that a legal fee rider accompanies your policy or if you should notify your US Insurance office of an accident.

The amount of the additional coverage ranges anywhere from twenty-five dollars to seventy-five dollars per policy year. When purchasing "Legal Help" from your agent be certain to check the amount of the "bond". Today in Mexico it is easy to incur a judgement of (the peso equivalent of) twenty-five thousand US Dollars. When the Mexican Insurance Company finally cuts a check, it is made payable to your surplus line broker, or to their bonding company. The annual fee that you pay for "Legal Fees" covers the profit that your US broker collects for providing this service.

Here are some summations:

• Cash In Hand settlements can be demanded by accident plaintiffs, especially if injury is involved or property damage is in excess of a thousand dollars.
• Mexican Insurance Companies can take weeks if not months to investigate and settle (pay) claims.
• It would be difficult to administrate and orchestrate legal matters and financial arrangement from a jail cell. Having a legal entity automatically represent you right-off-the-bat is the intelligent way to go.
• Most Surplus Line Brokers (US agents representing Mexican Automobile Insurance Companies) offer special supplemental (optional cost) insurance coverage that specifies quick payment of a limited bond to obtain the insured's release from custody.
• It is very true that someone with immediate access to adequate financial assets (and the ability to have funds transferred quickly) can do without supplemental "Legal Coverage". Laws in Mexico do not require automobile Liability Insurance, so "self-insurance" is also possible, but surely only a masochist would elect to avoid an annual insurance payment of perhaps a hundred dollars (or so).

Shortly after the above incident resolved itself, I found myself on the telephone ordering up a "Legal Aid" rider on my policy.

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