Guide to getting your property adequately insured in Mexico
Insuring your property in Mexico is an essential service you need to consider as part of your budget planning. Covering your house, personal property, and any watercraft your own will mitigate your risks in the event of unforeseen circumstances. This guide explains what you need to know to get your property adequately insured in Mexico.
Homeowner’s Insurance in Mexico
Watercraft Insurance in Mexico
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Insurance provided by our partners MexPro Insurance offer coverages using only A-rated insurers
When you own property in Mexico, especially a home or expensive watercraft, it’s important to consider how you will insure your assets against unforeseen circumstances and catastrophic events.
This guide explains how to insure your physical assets, and is distinct from property Title Insurance, a different product which insures that the proper title of the property has been passed to you in the form of property deed: see our accompanying guide to Title Insurance in Mexico for more details.
Property insurance policies in Mexico are quite distinct from policies sold in the U.S. and Canada. The policy wording is different and the types of coverage are different, so some things that you might think are included as standard, might not be if you purchase your insurance in Mexico directly from a Mexican insurer.
To bridge this gap, specialist companies based in the U.S. have developed property ownership insurance policies which reflect the wording, terms, and coverages included on US and Canadian policies. The insurance itself is underwritten by Mexican insurance companies (by law, it has to be this way), but the U.S. companies work in partnership to create a product that is familiar to those purchasing insurance in the US and Canada (or those who want a US-style policy), and which is legally-valid under Mexican law.
A house (and/or watercraft) tend to be the most expensive things most people own during their lifetime. It’s possible to lose a fortune (and perhaps even a life’s savings) if you are not insured, or discover following an unforeseen event or natural disaster that your policy was not adequate or that the insurer underwriting the policy was not financially sound.
Whether you purchase from a Mexican insurer direct, or from a specialist US-based company will depend upon your choice and expectations. This guide highlights some of the key questions you need to ask, and key aspects of property insurance that you need to consider as you prepare to insure your home and/or watercraft in Mexico.
Unless you have a specific reason for buying your Mexican home insurance direct from a Mexican firm (e.g. you’re prepared to take on a Mexican-style policy, your Spanish is good, and you are prepared to deal with claims in Spanish), we recommend that you consider the services of US-based specialists set-up specifically to service foreign-home ownership in Mexico.
This is because it’s important to consider that, in the event you need to claim, you will find yourself in a stressful situation, and having an insurer that has issued a policy in English and in terms you are familiar with and covering events which you are used to seeing covered in an insurance product will be worth any additional premium on the day you may need to make that telephone call to file a claim.
Further, US-led policies can include coverages (for example, third-party liability cover) as standard, whereas many Mexican policies do not cover these without them being specifically scheduled, and with significant additional premiums.
Elements of Home Insurance Coverage
Depending on your needs, circumstances, and budget, you can insure your property entirely or partially. The premium costs will depend on many factors including the location and type of your property, its age and value, and what events you want coverage for.
All Risks—vs—Named Perils
Some policies will offer “All Risks” cover, a form of comprehensive coverage that will pay out in the event of most incidents involving your home. The better policies offer the option to cover catastrophic incidents such as hurricanes, floods, wind, fire, volcanic eruptions, and earthquakes; surprisingly, some Mexican insurers are unable to underwrite some of these events.
To lower the premiums, you can elect to limit certain “Named Perils” assigned to your policy instead of taking All Risks coverage; in this case, certain events will be covered while others will not. Cheaper policies are often the “named perils” type—even though on the surface they might appear to be comprehensive. A good broker will make a clear distinction between these two during its sales offer and demonstrate the cover and price differences between options.
Your policy should cover the main structure of your house. Optionally, you may also cover carports, guesthouses, and other outbuildings including garages, games rooms, cabañas, equipment rooms, studios, etc.
Some homes in Mexico are composed of several structures (for example, several buildings situated around a central courtyard) and in these circumstances, the insurance rule is usually: everything that is directly connected is treated as one building. Anything that stands-alone is considered an additional building.
Insurance programs offered by our partner MexPro automatically cover the main building and all other buildings on the same property (e.g. bungalows, pool houses) up the maximum coverage value per property—currently US$1 million.
Note that certain structures, especially risky ones like wood-framed buildings and palapa roofing structures are usually explicitly excluded from all policies; if you must insure these, be prepared to pay a high premium to have them included in your coverages (it’s usually uneconomic to do so).
A good insurance policy will cover personal goods and chattels owned by you, your guests, or domestic employees when they are working at your residence. Some policies also include coverage for certain valuable property, such as money, securities, jewelry, fine arts, sporting equipment and property used for business purposes—up to certain limits. If you need higher limits for specific items of property that you own, this option is available by listing them on a special section of the application form. Theft coverage varies, depending on whether it is “scheduled” (i.e. specifically listed) or not.
Third Party Liability
Good homeowner policies insure your personal liabilities to third parties to protect you and your family for any lawsuits or demands presented against you in Mexico. For example, if a wall falls down and injures someone who was neat it at the time; or the neighbor’s property is damaged due to a falling tree from your garden, your insurance policy should cover your liability in these circumstances.
Loss of Use or Rental Income
If you rely on your property for work or to bring in a rental income, you may also choose to include a “loss of use” risk in your policy. This cover provides for additional living expenses in the event that your house is damaged and cannot be lived in for a time while it’s repaired or rebuilt and, if the option is taken for the loss of rental income, you will be covered for any loss of rental income due to your home not being available for use (you will need to provide evidence that a rental contract exists).
Renters Liability Coverage
Most homeowners insurance policies exclude coverage when your home is rented (even occasionally or part time), or add a hefty supplement to the policy’s premium to include renter’s liability as part of the coverage. If you rent out your home or condo, Renter’s Liability coverage is included by Mexpro (the company Mexperience is partnered with) at no additional charge—simply state that you rent your home on the appropriate section of the application and you’re covered.
Important Note About Simultaneous Occupancy when renting
If you rent part of your home (e.g. a room, or an outbuilding) to third parties while you are living on the property—known as ‘simultaneous occupancy’ in insurance terms—this is treated differently by insurance companies and a personal/domestic policy will not cover you: you’ll need to seek out a commercial policy which is likely to be more expensive. The reason is that simultaneous occupancy where a commercial arrangement exists creates additional risks (lawsuits, etc.) which a domestic policy does does take into account.
If, on the other hand, you rent the entire property and vacate the property while the renters are present, then a personal/domestic policy will suffice.
Insuring Your Condo in Mexico
Condo associations in Mexico are supposed to keep a blanket commercial policy in place to cover the entire property. Typically, this insures the building as well as communal elements of the property such as pools, garages, the interior walls, fixtures, fittings, and outbuildings associated with the edifice.
These commercial insurance policies tend to be very limiting in what they will cover within the terms of a condo insurance policy: many Mexican insurance policies in particular, exclude third party liability and renter’s liability from the standard policy and charge a substantial premium to include these as optional extras. This places an obligation on condo owners to insure elements not covered by the commercial policy themselves, on a unit-by-unit basis.
Don’t be lured into a false sense of security by condo blanket coverages: in a situation where an event that happens in your condo affects an adjacent condo, for example, a water leak in your shower room that damages your neighbor’s room below, you will likely become liable for repairs to yours and your neighbors’ damages. Having a personal insurance program in place will protect you from these sorts of events.
The key documents to check on your Condo contracts are the ‘Byelaws’ and ‘Covenants’ associated with your condo property: these are the documents that contain the small print in regard to what and what is not covered by the condo’s own insurance program.
Beachfront Property Insurance in Mexico
It is possible to insure property near the ocean, rivers, and lakes, although premiums may be higher to reflect the additional risks which may arise from storms and flooding in these areas. The insurance application form will ask for the Mexican postal code (zip code) of the property, and this is mapped to detailed topographical and statistical data which enable insurers to assess the hydro and meteorological risks that may present themselves to the property they are being asked to quote insurance for.
Some companies may refuse to insure properties close to the sea or other bodies of water, although policies offered by our partners, MexPro insurance, will insure your property even if it’s near the ocean, a river, or a lake.
Some people who own homes in Mexico also own a boat, a ski jet, or a yacht, and considerations need to be taken into account for the proper insurance of these while they are in Mexican waters.
The price you will pay for insuring your watercraft is based on two factors: the number of days the craft will be in Mexico, and the value of the watercraft. Personal injury and liability cover should also be taken out in the event that you are involved in an accident on the water; the better policies also offer legal assistance and ‘bond’ cover, in addition to the injury and liability cover. (In Mexico, if you are arrested following an accident, you will need to provide a bond to secure your release pending inquiries/trial). In legal terms, accidents involving watercraft, where people are injured or killed are treated in similar fashion to serious car accidents in Mexico.
If you plan to be in Mexico for an extended period, or live here, an annual policy may be a better investment than a piecemeal policy covering specific dates. Our insurance partner, MexPro, offers choices and flexibility to ensure that you are properly covered when enjoying your watercraft in Mexico.
Buyers purchasing insurance to protect their assets in Mexico are oftentimes misled by believing that they can rely on the broker, rather than the Mexican Insurance Company, to properly handle any claim that may arise during their stay in Mexico.
The insurance company underwriting your policy is much more important than the Broker that sells you the policy.
As all insurance policies are sold through brokers, it’s important to know which insurance company (or companies) are underwriting the policies being sold to you by the broker you choose to do business with.
With the recent turmoil in financial markets, it is more important than ever to purchase Mexico property insurance from a financially-strong insurer. No matter how reputable or well-intentioned an agent or insurance broker may be, if they place your insurance with a troubled insurer you could experience some unpleasant surprises in the event you make a claim.
The most important question to ask your broker!
There are over fifty insurance companies in Mexico. As is the case with insurance companies world-wide, it’s reasonable to say that some are in good shape, and some are in poorer shape.
Protect yourself and your investment by asking the broker, “Who underwrites your policies?”, and make sure that the insurance companies being used to underwrite your policy have a strong, stable, track record.
Insurance from a more stable and financially-strong insurance company may cost more, but the additional premium represents a lower risk to you in the event of a claim.
All insurance programs offered by our partners, MexPro Insurance, are underwritten only by A-Rated insurance companies.
Choosing an Insurance Broker
When you choose a broker, choose one that is properly licensed, and one that has the customer service infrastructure needed to properly take care of your claim and needs while you’re away in Mexico. Even if you purchase your insurance policy through a US-registered company, in the event of a claim it’s the Mexican Insurance Company that ultimately pays compensation.
Some US insurers have purchased an ownership-interest in Mexican Insurance Companies in recent times; however, these companies operate quite independently of the US parents.
Ask your insurance broker about the size and financial strength of the Mexican insurance companies they work with because in the event of further economic turbulence and/or the devaluation of the Mexican peso, combined with a few natural disasters or other unforeseen events, how will the insurer underwriting your policy cope?
AM Best is a US-based ratings agency that provides an annual rating for Mexican insurance companies. Not all Mexican insurance companies are rated by AM Best and of those that are, few have a “A or better” rating; defining the company’s risk profile as “Good or Excellent”.
Mexperience’s partner, MexPro insurance, a US based company that offers insurance programs for Mexico, only works with insurers that have an “A or better” AM Best rating.
The world’s top insurers are well-represented in Mexico, and these offer a range of products for domestic home-owners. Like the US, insurance companies come in different types and sizes and many of them are rated by US-based finance-rating agencies. These ratings indicate the integrity and solidity of the insurer: that is, the company underwriting any claims which may be brought against it when people buying insurance policies make a claim.
Some Mexican insurance companies do have a US-rating, but the rating may be average or below average. These insurers may sell lower-priced policies into the market, but those buying them do carry (knowingly or unknowingly) a higher risk in the event a claim is made.
Mexperience is pleased to offer our readers and members an opportunity to purchase flexible and competitively-priced Mexico Property Insurance online, in association with MexPro, a leading US-based and fully licensed insurance broker.
Insurance programs are available for homes (condos), and watercraft.
When you buy property insurance using MexPro, you get:
- A homeowners insurance program that offers the best coverage available in the market, with coverage and policy terms that have not traditionally been available in Mexico
- A clear, easily understood policy that reads similar to a standard USA Homeowners Policy (HO3)
- Policies backed only by “A or better” rated Mexican insurance companies
- Policies issued by a fully-licensed US Insurance Broker
- Policies that include a comprehensive suite of coverage services that home-owners seek, including hyrdo-metorological cover, third party liabilty, renter’s insurance and flexible deductibles
- First-class customer service, and bi-lingual claims line
- Full transparency about policy types and wording before you buy
- A broker happy to work with you, or your trusted US or Canadian Insurance agent if that helps you feel more comfortable buying the policy
- Policy that is sold in the US, with premiums paid in US-dollars and any claims arising paid-out in US-dollars.
In just a few minutes, you can get a quote, review your policy details, and arrange insurance for your property in Mexico:
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Insurance provided by our partners MexPro Insurance offer coverages using only A-rated insurers:
Property Insurance Quotes are provided by International Insurance Group, Inc., (MexPro) Licensed in the United States of America, CA License #OA99044. Mexperience is not an agent or broker and acts solely as a lead referral service to International Insurance Group, Inc.
This guide provides practical information to consider as you research options for the purchase of insurance coverages for your home and/or watercraft in Mexico. It is not intended to provide personal, legal, financial or investment advice to readers.