The Federal Bridges and Highways Law was recently amended to require automobiles that use federal highways to be insured with coverage for any liability for damages and injuries caused to third parties by the motor vehicle. The amended law is expected to expand automobile insurance coverage across the nation, as only a few states in Mexico have compulsory car insurance policies in their local laws (eg, Baja California, Jalisco, Yucatan, Chihuahua and Morelos). In the past Mexico City had attempted to make car insurance compulsory, but the efforts proved unsuccessful when public transport and taxi operators protested the measure. This new provision will have an important effect nationwide. At present, only three out of every 10 cars in Mexico are insured.
With the opinion of the National Insurance and Surety Commission, the Ministry of Finance will issue the rules governing this insurance, which will include a compulsory minimum amount of coverage for all motor vehicles. The decree provides that the reform will come into effect 180 days after the Ministry of Finance has issued these rules. The Ministry of Finance has yet to issue these rules.
Along with the Ministry of Finance, the Transport and Communications Ministry will issue its own rules and guidelines in order to verify compliance with this new obligation.
The law also states that motor vehicle owners who drive on federal highways or roads without the compulsory insurance will be subject to fines of up to $220. The fine may be overturned if the owner of the vehicle provides evidence that he or she acquired an insurance policy within 45 days of issuance of the penalty.
However, the amount of the fine is too low to compel compliance with the law. Given recent amendments to federal labour law, liability (including liability arising from the use of motor vehicles) is substantive where wrongful death or manslaughter is caused (and may amount up to $300,000). Therefore, the premium for such coverage is not expected to be low.
The Insurance Contract Law has also been amended to require compulsory insurance policies to be paid in a single instalment. The amendment states that compulsory insurance policies cannot expire, terminate or be rescinded before expiry of the agreed term.
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