Just gonna muddy the waters a little here.
First, there is NO LAW in Mexico re mandatory 3rd party liability insurance.
That said, if you don' t have it and get into an accident you will go to jail.
But there is no law. Here's an article from the Gringo Gazette:
Consumer Misinformation in Car Insurance Industry
Liability Insurance Not Mandatory in Mexico
By Vivian Stratton & Reporter X
Information provided to consumers by the US car insurance industry regarding Mexico’s requirements for third party liability auto insurance is frequently false, fraudulent, or misleading. A large number of US auto insurers, Mexico information websites, and other sources of information for US tourists are promulgating untrue information about Mexico’s auto insurance requirements. In Mexico, there is no law requiring a personal vehicle to carry any type of auto insurance, including liability. There is no Federal law, state law, or municipal law requiring drivers to carry liability insurance. Although liability insurance is not mandatory when visiting Mexico, most tourism experts agree that it is highly recommended. But, “highly recommended” is not the same thing as “legally required” or “mandatory”. Nevertheless, many cross border insurance companies regularly tell clients that it is illegal to drive in Mexico without liability insurance. The practice is so widespread that it probably warrants an investigation by US insurance regulators.
The Gringo Gazette conducted a survey of companies selling insurance to people living and traveling in Baja. Callers asked the companies about Mexico’s auto insurance requirements. Amazingly, these companies provided a huge range of answers as to what insurance requirements, if any, were actually required by law. About one third of the companies truthfully answered that there were no laws mandating liability insurance. Two thirds of the companies insisted that liability insurance was mandatory in Mexico. Several of the companies even said that drivers could not cross the border into Mexico without it, that you could be arrested or fined for driving without insurance, and that the President of Mexico had recently enacted a new auto insurance law, none of which is true.
Besides the false information from the auto insurance companies, much misinformation circulates on the internet and in news articles about Mexican tourism. Many of these websites probably obtained their information from insurance companies. Information sources based in Mexico tended to contain more accurate information than US based sources. The Mexican Tourism Board, for example, correctly informs callers to their 1-800 number that insurance is not mandatory, but is highly recommended. Two major Mexican based insurance companies, Atlas and Sanborns, consistently provided correct information to the public. People giving out wrong information usually say that there is a Mexican law requiring liability. But, if you ask the representative to specify what law they are referring to, they cannot cite it.
Third party liability insurance is highly recommended for Mexico travelers because it determines how long you will stay in jail if you are involved in an accident and arrested. Under standard Mexican procedure, anybody that causes bodily injury or serious property damages during an accident will be immediately jailed. If you don’t have liability insurance, you will have to post a bond to get out of jail, usually around $50,000. American visitors usually don’t realize that jail is the standard procedure, and the prospect of Mexican jail is terrifying to most tourists. For that reason, most experts, including the US State Department, highly recommend the liability policy for visitors.
Companies Providing Correct Information
Adventure Mexico
Mexico Tour Baja
Sanborns
Huggy Bear Insurance
Atlas
Baja Travel Club: “Traveler must have either $50,000 cash, bond, or liability insurance”
Mexican Tourism Board 1-800 Number: “Insurance is not mandatory, but is highly recommended”
Companies Providing Incorrect Information:
Mexico Insurance Online: “Liability is mandatory, ex Mexican President Fox passed this new law”, Cristine
ASA: “Liability is mandatory, driver can be fned without it”, Elena
Safe-Mex: “Mandatory”, Alma
Mexico Insurance Professionals: “Liabiltiy is recommended to be in compliance with Mexican law”, Fernando
Vagabundos del Mar: “Mandatory, must be written by a Mexican underwriter”, Carol
Mexican Insurance Proessionals: “Absolutely, it’s the law. You can be taken to jail just like in California. A cop can pull you over and demand proof of liability insurance”, Erin
Got Mexico.com: “You must have liability insurance to cross the border. You are not allowed to cross without it.” Shannon.
American Mexican Insurance: “You need Mexican insurance to cross the border”, Gaby
Baja Bound: “Liability insurance is mandatory”
Adventure Mexican Insurance: “Liability insurance is a civil law”, Eddy
Next, Am EX has the premium insurance coverage (24.99 or 19.99 for a little less coverage in Colorado Cindy!!!) which covers collision and injury but not the 3rd party liability. You have to sign up for this premium coverage and Cindy is right about it being a flat rate for up to a 42 day car rental. The charge is automatic if you use your Am Ex to pay for the rental.
Finally, Avis and Hertz include @$35k -$50k liability insurance in their car rates.
I've rented from Avis in PV and never been given the hard sell on insurance or liability. But I recently got a great rate through Hotwire for a Hertz rental ($8.95 a day) so I 'm researching this fully as I 'm afraid they'll insist on my buying the coverages or else they won't rent me the car!!!!!
