What Liability Only (LO) Protection Covers
In short, LO only covers the ‘Other Guy.’ Any damage or additional benefits such as towing, theft, vandalism, etc. is not included.
The question one should ask before purchasing Liability Only is, “Am I OK walking away from this vehicle if it is involved in a collision?” If the answer is, “Yes!” then, go ahead with Liability Only. One caveat though, if you have a TVIP (Temporary Vehicle Import Permit), you have an additional requirement. A TVIP is required for most of Mainland Mexico. In the event of a total loss, you will still need to transport the vehicle, at your cost, to a border Banjercito location where you can have your permit properly canceled. A list of Banjercito locations that you can obtain or return a TVIP can be downloaded from the official government site, here.
If your vehicle is over 20 years old, you may be limited to a LO policy.
Why You Should Buy Mexican Auto Insurance.
You need to buy a policy issued by a Mexican insurance company. You can get valid coverage from MexicanInsuranceStore.com
There are some insurers in the US and Canada that issue limited protection. They may cover up to 25 miles in, from the border. Your domestic insurance will not extend liability to other parties. If an accident occurs and it is established that you are at fault, it would be very messy.
The law in Mexico makes it compulsory for all vehicles to get insured when driving in Mexico. The minimum protection is liability-only. Unless your car, motorcycle, or RV is over 20 years old, get full coverage. The best advice is to match your US or Canadian insurance when buying Mexican Insurance. This way, your risk remains the same.
A liability-only contract will only cover the damage you cause to other people or property.
Why Comprehensive Full Coverage May Be Better
Any accident can affect even the most careful driver. If you have an accident that is your fault, a comprehensive full coverage policy allows you to have your car fixed under your coverage terms. If the vehicle is a total loss, you will have money to replace that vehicle. You will also have legal help in getting the TVIP canceled out. With liability-only protection, you would shoulder the full cost of your own vehicle’s replacement.