The insurance market in Mexico has experienced tremendous growth in the past decade. Brokers go through a licensing process, & the good ones are extremely effective advocates on your behalf should a claim arise. Even though the culture of insurance has yet to be widely adopted into the Mexican culture, there are plenty of options for Americans & Canadians looking to protect their investments.
Legally, all policies issued in Mexico are underwritten by Mexican insurance companies. However, there are many American insurance companies who have partnered with their Mexican counterparts to offer insurance products that look, feel and operate in a way that’s familiar to both Americans and Canadians. If you elect to work with one of these brokers, don’t be surprised if he/she isn’t located in Mexico. Most aren’t!
Before you reach out to a broker, here are 5 questions to consider:
1. Do you want an ALL RISK or a NAMED PERIL policy?
NAMED PERIL = only the items specifically noted in the policy are covered. So, if it doesn’t say glass coverage, there is no glass coverage if a window breaks.
ALL RISK = policies that cover everything except what is specifically said to be excluded.
When you talk with your broker, make sure to ask which type of policy you’re reviewing. The Named Peril policies are typically cheaper because they cover less. With these policies the burden is on you to prove the event. An All Risk policy will cost more. The coverage is broader and the burden rests with the insurance company to prove exclusion if they refuse to pay a claim.
2. Do you want hurricane coverage?
The decision to purchase hurricane insurance, believe it or not, isn’t automatic for everybody. While the lower Baja Peninsula sits in a hurricane zone, we can go years without seeing any activity. When hurricane Odile hit in 2014, it was only the 3rd major hurricane to make landfall on the peninsula since 1948.
The damage of Odile was extensive, but after this event, many homeowners discovered that the cost to repair their property was so close to their policy deductible, that it didn’t make sense to even file a claim. Adding hurricane coverage to your policy usually doubles the cost. So, look at the cost of the premium AND the required deductible to evaluate what works best for your family!
When you purchase hurricane insurance, you need to specify your distance from the ocean. Here’s an easy way to calculate that!
STEP 1: go to Google Maps: www.googlemaps.com
STEP 2: Type in your street address. If it doesn’t recognize your street address, type in “Cabo” & simply zoom in on your home’s location using the “+” in the lower right corner.
STEP 3: Right click on your home’s location and select “measure distance” from the list of options.
STEP 4: left click on your property location & left click again on the ocean.
Google Maps will draw you a ruler and will give you the distance in both feet & meters!
3. Do you need renter’s insurance?
If you plan to rent your home, it’s usually a good idea to purchase a Renter’s Liability policy. This type of coverage may be a little harder to find, but it does exist. With this coverage, you can typically also add on a Loss of Rental Income rider in the event you’re unable to rent your home and a valid contract does exist.
4. How much Third Party liability do you want?
Third Party Liability is now standard on Mexican insurance policies. It is typically inexpensive as Mexico’s culture is not litigious. This type of policy will not only protect damage you may inadvertently cause to someone else’s property, but just as importantly, it will cover you in the event that your neighbor doesn’t carry a homeowner’s policy. Our area draws people from all over the world. It is not a given that the person next to you has insurance!
This coverage can be particularly important if you have a team maintaining your property or are remodeling. Make sure to ask: 1) if people working for you are covered, & 2) if you’re protected even when the negligence belongs to someone else who isn’t covered.
5. Do you need insurance for your Condo even if your HOA has a policy?
While your HOA may cover a blanket policy for your building’s structure and common areas, the policy will most likely NOT cover your contents nor the liability inside your condo. Sharing walls with others means you’ll want liability coverage for events in your condo that may harm other condos as well as coverage that protects your place when others inadvertently damage yours!
Insurance policies are easy to buy and relatively inexpensive. Make sure you protect the investment you spent all those years working toward!
INSIDER TIPS:
- Your relationship with your insurance broker in Mexico goes beyond just writing the policy. They help with claims and are can be much more effective in moving things along than you trying to handle it yourself. So, don’t be shy to ask for help!
- Make sure your policy reflects the legal address of your property as it appears in your Escritura (property title). For example, you may use a street name & number for your utility bills, but the municipality might still refer to your property by its lot number.
- Take pictures of everything! Especially if you don’t occupy your home full time, it is very easy to forget what you may have/not have in your vacation home.
