US citizens who travel to Mexico either on a business or vacation sometimes forget one of the simplest things: Baja Bound's FAQ says US and Canadian insurance is not considered proof of financial responsibility under Mexican law. This is why most people get a valid policy in Mexico to travel without any worries or concerns.
However, choosing an auto insurance company might prove to be a hassle for most travelers. Fortunately, some agencies help you pick the right auto insurance companies by providing you with ratings for each of them. But what are these ratings, and what exactly do they mean? Let’s explore this in more detail.
Where It All Began
It was never necessary for auto insurance companies in Mexico to be rated before 2015. As a result, citizens from the United States and Canada had no idea which would be a good company to opt for their Mexican auto insurance.
However, things changed in 2015, when third-party companies began auditing and rating Mexican auto insurance companies. Two rating agencies, namely AM Best and Standard and Poors, have taken up the responsibility of providing ratings based on the company’s ability to pay out on their claims.
What Do The Mexican Auto Insurance Ratings Mean?
There are about fifty Mexican Auto Insurance companies in Mexico, but not all of them have been given ratings by AM Best and Standard and Poors. However, many of them have been checked for their assets and liabilities and given a letter grade to show their robustness as an insurance company.
Typically, AM Best and Standard and Poors look at several different factors before providing this rating. Not only do they examine what kind of business these insurance companies engage in, but they also see how much business they bring in regularly. The rating agencies also check the prices they offer in relation to the claims that people make at the company. Precedented losses are also calculated, and the agencies also check whether the insurance company is capable of handling those losses or not.
The rating agencies also check the kind of reinsurance they offer. Based on this, the rating agency will provide the auto insurance company with a letter grading. Of course, it goes without saying that the higher the rating, the better the company’s ability to make good on their insurance claims.
What Rating Should I Look For?
A higher rating indicates the agency's view of a stronger ability to pay claims. Look up the current rating of any insurer before you choose an insurance company, and check which agency issued it.
On its quote page, Baja Bound says it works with “A” rated companies and that both Chubb and HDI are rated mxAAA by Standard and Poors.
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