Despite the fact that many American insurance companies offer policies with coverage for driving in Mexico, the Mexican police will likely not recognize the coverage. If driving to Mexico without Mexican car insurance and there is an accident, it is possible to be arrested and have the car impounded. Plus, it is necessary to apply for a permit to drive in the majority of Mexico.
An American driver's license is accepted in Mexico, though consider having it translated into Spanish (and nine other languages) by getting an International Driver's Permit. It is necessary to apply for it within six months of traveling to Mexico. Fill out an application with AAA and include two passport-sized photos and a photocopy of the front and back of the US driver's license with the application. Remember to carry the US driver's license along with the International Driver's Permit when driving in Mexico.
The Temporary Import Permit
The Temporary Import Permit was created to prevent imported vehicles from remaining in Mexico illegally. There are only two areas of Mexico where it is possible to drive a car without needing Temporary Import Permit. The first is the Border Zone, which extends from the US and Mexico border to approximately 20 kilometers south of the border throughout the country. The second is the Free Trade Zone which includes the Baja, California peninsula and the Sonora Free Trade Zone.
Applying for the Temporary Import Permit
It is possible to apply for the Temporary Import Permit at the border or at a Mexican Consulate before traveling to Mexico. It is necessary to bring the original and two photocopies of multiple documents including for the passport, the vehicle registration, a US driver's license and a US credit card that will be accepted in Mexico. Present the documents at the Modulo de Control Vehicular lane of the crossing, pay the application fee and post the return guarantee bond. This is a deposit made to ensure the car is brought back from Mexico. The permit will be valid for multiple border crossings for up to 180 days.
Car Insurance in Mexico
There are two aspects of car insurance to consider. The first is the liability. Mexican liability insurance must be purchased from a Mexican insurance company because the US liability coverage will not be valid in Mexico. The second consideration is the collision and comprehensive insurance. The US insurance company may still cover a claim made for damage to the vehicle while driving in Mexico, but it is not likely. The insurance company can tell for sure. If involved in an accident in Mexico, remember that there is a possibility to be taken into custody until a fault is determined. When purchasing the liability insurance, be sure that it includes coverage for bail in case detainment.
All documents that are carried for the vehicle, including the purchased insurance, must be issued in the name of the owner. While in Mexico the vehicle can be driven by the owner's spouse or children without the owner of the vehicle, as long as those family members have a valid immigrant visa. Other people cannot drive the vehicle unless the owner is in the car. It is prohibited from selling the vehicle in Mexico. If attempting it, the vehicle will be confiscated and the bond forfeited.