In March 2014 the Ministry of Finance issued rules that obliged vehicle owners travelling on federal roads to obtain liability insurance to cover damages caused to third parties or their property.(1) This obligation became effective in September 2014.

Despite the new regulations, insurers report that car liability insurance has not increased as expected. However, states are now looking into requiring liability insurance for all cars on the roads in their cities.

On August 2015 the government of Mexico City issued new traffic regulations, effective from January 2016, which require mandatory liability insurance for vehicles registered in Mexico City. The minimum coverage required is Ps50,000 (approximately $2,942) for property damage and Ps100,000 (approximately $5,883) for damage caused to persons, including injury and death. These amounts are clearly insufficient in case of loss or accident, since liability for manslaughter is much higher. However, Mexico is taking the first steps to promote an insurance culture across the population.

Failure to obtain insurance will result in fines of up to Ps2,798 (approximately $165), which is also insufficient.

Other states are expected to follow Mexico City's example and introduce an obligation for all vehicle owners to obtain liability insurance. The impact and benefits of this policy remain to be seen; however, it is generally considered to be a small but important step towards a safer, more sophisticated insurance culture in Mexico.

For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (carlos.ramos@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

Endnotes

(1) For more details see "Compulsory car insurance for federal highways and roads".

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