You might be tempted by low car rental rates in Mexico—rates so low that they're practically free. Seriously, we've seen weekly rates in the single digits in resort cities like Cancun. But as with everything in life, there's no such thing as a free almuerzo.
If you travel near the U.S. / Mexico border, you will probably seen signs advertising car insurance for crossing into Mexico. Before you make a decision, know that the differences between car insurance requirements in U.S. and Mexico are significant.
How to Rent a Car in Mexico
In many ways, renting a car in Mexico is much like in the United States. You need a major credit card, valid driver's license and passport. Drivers under 25 will pay more. It's more expensive to pick up and drop off at an airport. And you should always inspect the rental vehicle car before you drive away, and photograph the condition of the car when you return it.
You'll find a large assortment of rental car companies in Mexico, including most of the major international chains, such as Avis, Alamo, Thrifty and Hertz. There are also plenty of national car companies, which can offer better rates but you may worry that it may be harder to settle a claim if the car is damaged.
If you reserve your car rental online, it's a good idea to get your rate quoted in Mexican pesos. If you get your rate quoted in dollars, it is likely to be converted to pesos at an unfavorable rate.
Print out your reservation information and present the document at the rental counter when you pick up your car. Confirm that the rate on the reservation and the rate on the rental agreement match.
The Insurance Gotcha with Mexico Car Rentals
Just like in the U.S., car rental insurance in Mexico is mainly divided into two types of coverage: collision damage and liability. But Mexico has a mandatory insurance requirement that makes declining coverage a potential minefield. The dirt-cheap Mexican car rental rates don't include insurance, which can triple the cost of the rental.
Your personal car rental insurance will not extend to Mexico. Your credit card may provide rental car coverage worldwide—but for only for collision damage. Still, bring along any documentation you have—overzealous rental agencies may try to get you to buy their CDW coverage, but as long as you can prove you're covered, you should be able to avoid having to buy it.
The trickier issue is that your credit card will not provide the required Mexican liability coverage. If you don't acquire coverage beforehand, you can purchase liability from the rental car company or choose a higher rental rate that includes the required liability coverage.
Think they're joking about mandatory coverage? Here's an excerpt from an Alamo rental agreement in Merida, Mexico. Note the $2,500 security deposit hold on the renter's credit card.
THIRD PARTY LIABILITY PROTECTION OR TPL IS REQUIRED ON ALL VEHICLES. CUSTOMERS HAVE THE OPTION TO PURCHASE THIRD PARTY LIABILITY OR TPL PROTECTIONS OR SHOW PROOF OF A VALID CURRENT LIABILITY INSURANCE POLICY SPECIFYING COVERAGE IN MEXICO. ADDITIONAL SECURITY DEPOSIT IS REQUIRED IN THE AMOUNT OF 2500.00 USD TO BE HELD ON THEIR CREDIT CARD. TPL PROVIDES YOU WITH THE MINIMUM FINANCIAL RESPONSIBILITY LIMITS AS OUTLINED IN THE APPLICABLE MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAWS OF THE COUNTRY WHERE THE VEHICLE IS OPERATED. TPL PROVIDES LIABILITY COVERAGE UP TO 70,000.00 USD. TPL DOES NOT COVER THE RENTAL VEHICLE, PASSENGER OR MEDICAL EXPENSES. LIABILITY INSURANCE PRODUCTS PURCHASED ON THIRD PARTY WEBSITES ARE NOT ACCEPTABLE FORMS OF COVERAGE. TPL IS 15.00 USD PER DAY.
Even if you can demonstrate that you have a valid liability policy that specifies coverage in Mexico, you may still be asked to provide a security deposit that's returnable at the end of the rental. (Note that hefty security deposits are commonplace around the world.)
Be aware that some companies such as Payless might impose a credit card hold equal to the full value of the vehicle if your documentation is deemed insufficient and you decline liability coverage.
If you don't have liability coverage, you can opt for a Third-Party Liability plan for $15 per day. This insurance covers claims for injury or damage you cause to another driver, car or other property damaged in an accident. This per-day rate for liability insurance is often the equivalent of the weekly rate for the car.
Car Rental Damage Claims in Mexico
The legal system in Mexico is much less lenient if an accident occurs and so the insurance stakes are higher. Think twice before declining any insurance until you triple check what coverage you have.
If there is an accident that causes injury and the police haven't figured out who's at fault, drivers can be taken to jail while responsibility is determined. A renter at fault isn't going to leave Mexico until the injured parties receive an acceptable settlement.
Given the hassles of procuring car insurance in Mexico, and given the potential penalty if there is an accident, it's often safer and cheaper to opt for a more expensive car rental rate that includes the legally required liability coverage.
Among the larger international rental companies, Avis often provides rental quotes with the liability insurance included—but always check terms and conditions when booking. If possible, contact your rental agency before you leave and get documentation in writing of what you need to bring to avoid having to purchase unnecessary insurance, since the pen is always mightier than the most persuasive commissioned sales agent.