Car Insurance in Mexico–My Experience

One of the most frequent questions I get from travelers to the Yucatan is “Do I really have to buy all that insurance when I rent a car in Mexico?” In general, base rental rates from international agencies can be cheap–sometimes less than $20 per day–but the full insurance package kicks it up to about $50 per day. And most people’s credit cards ostensibly offer rental car insurance as a perk. But is that adequate?

Here’s my experience, based on more than six years of travel there, and more than a dozen car rentals. All but one trip has been completely incident-free, and on this last trip, in September 2009, I got into a small accident. This was mildly stressful, but it turned out to be a great way to test the system!

Since my first trip in 2003, I have been relying solely on my credit card to provide insurance (initially Visa, but now often American Express–both offer 30 days’ coverage; MasterCard’s 14-day limit is not enough for my trips), as I do when I rent a car in the United States. At first, I was too broke to buy extra insurance, and later, once I knew my way around, I figured it was worth the risk–good roads, reasonable drivers and low crime make the Yucatan a pretty safe place to drive. But I admit, I do breathe a sigh of relief every time I return a car intact.

All but once, I have rented from Hertz, and I have never gotten a heavy upsell on additional insurance. I explain I’m using my credit card’s insurance, and they say no problem. The one time I rented from Budget, I also got no pressure to buy the insurance. Back in 2006 or so, I did compare more rental companies, and I noticed that Hertz was the only international rental company that did not say, when making an online reservation, that additional insurance would be required in Mexico. (I just did a cursory check, and I’m not seeing this anymore, at least with Budget or Avis.)

Then, on this last trip, I finally did get into a small traffic accident, which involved another car. I’m 90 percent certain it was my fault, and I did more damage to the other guy’s car than to mine. No one was hurt. We both pulled over out of the intersection; I called Hertz, and the guy called the police. Hertz said they’d send an insurance adjuster immediately, and a motorcycle cop showed up not long after.

The adjuster took down both cars’ details, took some photos and made both of us drivers sign the forms. I took photos of both cars too, just in case. The cop was very kind to me, and didn’t even write me a ticket–“You should get one, ” he said, “but you’re very sweet.” Politeness (and a lot of hand-wringing and apologizing over and over!) wins the day!

It was incredibly lucky that the accident happened directly in front of the Fiesta Americana hotel in Merida–where there’s a Hertz office! So I just drove my car back across the intersection (very carefully and looking both ways!) and took the insurance adjuster’s form into the Hertz office. They looked over the paperwork, and my contract, and said it was all no problem and that I’d hear how much it would cost in about five days (I had two more weeks of my trip left). I got a new car, and was on my way. The whole process, from crash to new car, took about an hour and a half, and everyone was exceedingly kind and polite.

But enough of the soft info. Here’s the hard data: I called American Express later in the day, to let them know what had happened. Again, no problem–they advised me to fill out an online claim, and they’d sort it all out when I closed the contract on the car. No alarm that I was in Mexico, no worry that I didn’t have more than a doc from the Merida Hertz office (they’d taken the adjuster’s form–though I took a photo for my records) or anything. I was just warned that AmEx would pay only for the damage done to my rental car–the damage I’d done to the other guy’s car was my responsibility.

I was a little worried about this, but I figured in all I’d saved in not paying for insurance over the years, I could definitely pay $500 or so out of pocket, and still come out ahead.

But when I returned the car at the end of my trip, I found out I didn’t need to worry. “Our company’s liability insurance covers the damage to the other guy’s car,” the woman at the desk told me when I checked out. Great!

AmEx had advised me not to let Hertz charge my card for the damage–about $800. But I was unable to convince Hertz of this, so signed off on my rental fee plus the damages. Again following AmEx’s advice, I called up the billing department and asked them to lodge a dispute on $800 of the total Hertz charge–this meant I didn’t have to pay this amount on my next bill.

Then I sat back and waited. I could check the status of my AmEx claim online, and after a few weeks, I saw that Hertz had still not supplied a lot of the documentation. I emailed all the extra photos I’d taken, just in case they were needed, but never even got acknowledgment that they’d been received.

About six weeks later, I received a letter in the mail letting me know the claim had been settled, and the charge had been cleared from my account.

So, the whole process was a breeze, and worked exactly the way it was supposed to. The Hertz woman’s comment about their liability insurance makes me think this may be the difference between Hertz and the other international rental agencies that require extra insurance–perhaps Hertz is the only company that carries its own liability insurance? (I wanted to sit down with a Hertz rep in Cancun and get a straight answer on this, but in the end I wound up with someone else who didn’t speak English well, and I don’t trust my Spanish for these things!)

Another detail, however, before you go running out and not buying insurance in Mexico: No one was hurt in this accident. It is true that in Mexico the police have the right to take you in if it seems you’re at fault (the “guilty until proven innocent” approach). So it is possible that if I had injured the other driver (or perhaps even if there had been a dispute over who was at fault), I would have been taken into police custody and forced to post bail if I wanted out.

At this point, though, I’m not sure whether additional insurance would actually help. Would it pay bail money? I have no idea. Would either the car agency or AmEx provide legal advice in such a situation? I seriously doubt it.

So–I wish I could answer all questions, but at least this provides a little first-hand account of a very satisfactory system (if only health insurance worked so well!). Keep in mind that it may be very specific to Hertz and American Express. If you’re curious about any other details, ask in the comments.

By the way: when you use your credit card’s insurance, the rental agency (Hertz and Budget, in my experience) puts a hold of about $7,000 on your card (that’s for the rinky-dinkiest Dodge Atos). That sounds alarming, but…it’s just a hold, not a real charge. (Though, obviously, you do have to use a card with a decent credit line.) Yes, if the car is totaled, presumably the full $7,000 would get charged to the card. But I assume the procedure would continue as I experienced–you can dispute the charge and wait until the claim is settled.

Also by the way: I do not have car insurance in the United States (because I don’t own a car–not because I’m an outlaw!). Occasionally this is mentioned as another reason to buy additional insurance, but again, I don’t think this has any bearing on the situation in Mexico. (Is it true in the US, though? I have had Enterprise try to upsell me based on that argument.)

13 comments

  1. suzanne curry says:

    Hi – just wanted to mention that for any non US/Canadian visitors, that credit cards do NOT cover your car hire insurance. Trying to find a cheap long term rental (def not Hertz) is not easy that do not insist u take their own insurance. Hertz etc any of the big names are NOT cheap for a rental going over 2 weeks. By far the best bet I got was BlueWay Car rental (a company buy out of Budget here). They amazingly had clear instructions on their website that you DO NOT have to take their insurance. I have rented a car with them for 3 months now (30 days each time) at less than $500 each time. I took out separately my own CDW and SLI insurance before coming, and they were fine with that.
    I would recommend NOT driving in Mexico without insurance. If u own a car and drive without insurance, it is illegal in most countries. Don’t think you can do without it here – its there to protect you and the public, so I disagree with this article that suggest u can do otherwise.
    Hope this helps some research – god knows I did massives of car hire reserach before coming out here.

  2. Zora says:

    Suzanne–yes, I should have specified–all this info pertains to US-issued credit cards. I don’t know whether any credit cards in other countries provide car insurance as a perk.

    As for prices, Hertz’s rate is no higher if you rent for four weeks or for one–but again, that may be because I’m renting from the US. Credit-card insurance runs out after 30 days anyway, so there’s no benefit on any rentals longer than that.

    And I’m not suggesting anyone drive without insurance–I just wanted to clarify for Americans (at least), collision insurance provided by a credit card is, in my experience, adequate.

  3. Steve says:

    My problem isn’t that they insist I buy CDW but that I have to buy Liability insurance. My understanding is that Mexican law requires that the rental company include this as part of the rental but so far I haven’t managed to decline the insurance. They just refuse to rent the car.

    So my question is how you pull that off? Perhaps Hertz is the only one that follows the rules on this but have you successfully rented from another company without buying the liability?

  4. Zora says:

    Steve: That’s a bummer, but interesting data. I’m not surprised. About five years ago, I started noticing that a lot of rental companies started adding a little note at the end of the online rez process about additional insurance being required at Mexican offices. At the time, the only major agencies that didn’t have the note were Hertz and I believe Budget. And I did rent from Budget around that time and was not charged for liability. I haven’t rented from
    any company but Hertz since, though, because they’re just about always cheapest where I rent (Cancun).

  5. Greg says:

    Unlike you, I can a bad experience with American Express insurance.

    I had an accident in Costa Rica. A window was broken and the side of the car scratched. I was on a legal road, but as there was no one around, I drove about 5 miles to the nearest village and spoke with a police officer, and called the rental agency. As the car was not at the scene of the accident, the officer refused to write an accident report (or maybe there was some other reason, not sure). The rental agency assured me this wouldn’t be a problem, and that they would get all of the necessary paperwork. Both I and the agency wrote up what happened. And I took pictures, etc. At first Amex accepted and paid the claim. Then, later, some Amex “manager” decided to decline it, and I got stuck with the bill. Fortunately, the rental agency charged only for actual repairs that were reasonable.

    I still don’t know what I could have done differently, accept to have purchased the local insurance. Even though I was covered, as there were two parties involved, neither really had an incentive to help me.

    So be forewarned, if Amex can get out of it on a technicality, they very well might.

  6. Zora says:

    Sorry to hear about that, Greg–and thanks for posting! Very good to know about this. My first instinct in your situation would’ve been to drive to the nearest town as well. It’s pretty rotten that Amex actually reneged.

  7. Jeff says:

    We’re about to head down to the Yucatan next week and I’ve been looking at Hertz and Blueway. Blueway is way cheaper $264, tax included, for four weeks but they want $13 per day for SLI and the total liability insurance is only $75,000 US. My Canadian Visa card covers CDW but not liability. I’ve been looking online for an insurance company that would sell me liability insurance for a rental car but haven’t found one. They only seem to sell insurance for cars rented in Canada or the US and then driven into Mexico. Which is too bad because the rates are great – less than $200 for $150,000US coverage for a year. If anyone can tell me where I can buy liability insurance for a Mexican car rental I would appreciate it. I think Blueway will let me decline theirs, especially if I can show I have purchased coverage elsewhere.
    What is frustrating is that Hertz sells additional liability insurance for the same $13 per day but their coverage is $450,000 US. If Blueway offered that deal, I’d take it because $75,000 doesn’t seem like enough.
    Thanks for any assistance anyone can offer.

  8. Charles says:

    We just returned from St. Martin where we rented from Hertz. You should always (ALWAYS!) be sure you have purchased liability insurance. An accident could have tens or even hundreds of thousands of dollars of liability and none of the credit card policies cover liability. When shopping for the car for St. Martin, Hertz included the liability insurance in the quote. Others charged a separate fee, usually about $12 per day, which made it harder to comparison shop. The policy in Mexico may be similar. Declining liability coverage could be a bankrupting risk!

    We managed to get a flat tire in St. Martin (the potholes are epic there) for which we were charged $100. It’s being processed by Amex now, but the process has been pretty straightforward so far.

  9. Greg says:

    I couldn’t find a place that would sell me liability insurance (which apparently is required in mexico) in advance either, which means apparently I’m forced to buy the rental car company’s. what’s the point of comparing rental fee quotes when the real cost is what they charge for a required liability insurance?

    Does anybody know of a company that will sell liability insurance in advance to cover you for a car rented in Mexico?

Comments are closed.