Property Insurance in Mexico: What To Know

Owning Mexican real estate is a dream for many people. The beautiful climate, laidback lifestyle and delectable cuisine make it the preferred place to purchase a second home or for retirement for Americans and Canadians.  An important part of becoming a happy property owner in Mexico is to ensure you properly protect your investment from unforeseen circumstances and catastrophic events. The best preventative measure to achieve this is to purchase adequate property insurance in Mexico. Property insurance in Mexico is a bit different from title insurance in the States or Canada, although there are many similarities. Read below to learn more general information about property insurance in Mexico.

Property Insurance in Mexico: What to Know

Property insurance in Mexico may be a bit different than what you are used to back home. Some items you may believe to be standard coverage may not be covered on a Mexican policy. In addition, the policy wording will be different, although many property insurance in Mexico providers now offer policies that are more similar to US and Canadian policies. Mexican insurance companies underwrite the policies so they are valid and legal according to Mexican law. It is important to properly protect your investment against unforeseen events or natural disasters. If not, you could be putting yourself at risk to lose a lot of money. Continue reading below to learn more about property insurance in Mexico.

U.S. Based Property Insurance  Companies

Are you fluent in Spanish and feel like dealing with legal documents in Spanish is something you can handle? If not, it is suggested to work with a property insurance in Mexico provider that offers policies in English. These days, there are US based insurers that specialize in policies for foreign home ownership in Mexico. If you ever have to file an insurance claim, it will be much easier if you are dealing with a policy in English. Insurance claim related situations can be stressful, so avoid added stress by selecting a property insurer that you can work with. Also, the majority of US based property insurance has added coverages not typically available with Mexican based insurers. One example is that third-party liability coverage is standard for most US based policies, and that is not the case with Mexican insurers which often charge an additional premium for that coverage. Third-party liability insurance is important coverage to have in order to protect you from lawsuits in Mexico.  

Which Structures Can You Insure?

In Mexico, many homes are comprised of multiple structures such as guest houses, studios and casitas, so it is important to ensure that your property insurance policy covers all structures on the property. You may have to add the options to cover all additional buildings and make sure your policy clearly states which buildings are included.  Stand-alone structures are considered additional buildings, so check that your property insurance policy indicates which buildings are covered. In addition, potentially unsafe structures such as palapa roofs and wood-framed buildings are often considered high risk and excluded from insurance policies. You will likely have to pay a high premium to have those particular structures included, so it may make sense to leave those structures out of your policy. Consider the cost to replace or repair versus the additional cost to include them on your policy, and you can make your decision accordingly.

Do You Need Vacation Rental Insurance?

Will you be using your property as a vacation rental? If so, make sure you elect to have renter’s liability coverage. This is especially important if you rely on rental income to support your quality of life. Make sure to include property rental coverage to protect yourself from a loss of use if something happens to your home.  This additional coverage will help cover living expenses if your rental becomes damaged and cannot be rented until it is repaired. Renters liability coverage is usually excluded on most standard policies, so confirm exactly your coverage prior to purchasing a property insurance in Mexico policy. Although you may have to pay an additional premium for renter’s liability coverage, it is essential for individuals who rent out their home as a vacation rental.

When you buy property in Mexico, it is important to purchase a property insurance policy that you can understand and properly covers your investment. Carefully check to insure that third-party liability coverage is included, and verify that rental income will be protected if your home is also a vacation rental. Lastly, if you own property that contains multiple dwellings, insure which structures are included and make sure it is clearly stated on your policy. If you buy your property from a reputable developer like Tafer Hotels & Resorts, ask for advice as the real estate team can offer onsite assistance to obtain property insurance that is right for your needs.