Is Your Residential Home in Mexico Insurable?

After the strong earthquakes which came to pass in Mexico during September 2017, property insurance became a talking point among some homeowners—particularly those who were unaffected but know people who were, and who through conversations with their friends and family discovered the significant costs of demolishing and rebuilding (or reinforcing) badly damaged homes.

Coverage against natural disasters

If you own residential property in Mexico it’s important to consider how you will insure what is probably your most-valuable asset against unforeseen circumstances and catastrophic events.

The principal natural-disaster risks in Mexico arise from hurricanes, severe floods, and earthquakes.  Strong winds can also pose a risk, for example, by felling trees that might fall and damage yours or a neighboring property.

Insurers have access to enormous amounts of topological, meteorological, and historical-event data which enables them to assess the risk in tandem with the Mexican postal code system: mapping properties to those data, and pricing insurance premiums accordingly.

‘All-risks’ versus ‘named perils’ coverage

Most residential property owners can get a quote based on an “all risks” or a “named perils” basis which can cover a plethora of eventualities, including structural damage, cover for third party incidents (e.g., a tree on your property falling in a wind storm, or someone injuring themselves while visiting your property) as well as home contents coverage in case of burglary or flood damage.

Situations which are difficult to insure against

While most property in Mexico can be insured, there are three special situations to be aware of in which property is difficult (or impossible) to insure:

Property that you possess but do not hold title to

As we describe in a related article, some properties in Mexico can only change hands under agrarian (common land) terms, which means that the purchaser gains possession of the land and can have quiet enjoyment of the property but never holds a legal title deed that is recognized in Mexican civil law courts.

If you own (or purchase) property on agrarian terms, be aware that it may be difficult (or impossible) to insure any structure you have or build on it, because in the event of a claim, the insurer may demand to see the legal title deed, not proof of possession. Thus, in the event of loss caused by a major event like a hurricane, earthquake, or severe flood you would need to cover the repair or rebuilding costs yourself.

Coverage for palapas and other natural coverings

Some Mexican homes feature elaborate open-air palapas —usually constructed using a combination of wood, bamboo and palm leaves— either as stand-alone features on the property itself, or as annexes to roof gardens or other terraces.  Palapas are notoriously susceptible to the elements as well as being a severe fire-risk.  For these two reasons, property insurance policies always exclude these structures from the coverages in the small print, because the historical data show that the risks of insuring them is too great.

Property situated in the Yucatán region

For geological reasons, it’s more difficult (but not impossible) to insure property situated in the Yucatán peninsula.  Many underwriters offering online coverage plans usually won’t quote for Yucatán postal codes; however, our associate MexPro insurance now offers insurance for residential properties situated on the Yucatán peninsula (comprising the states of Yucatán, Campeche, and Quintana Roo).

Note about insuring commercial property in Mexico

If you intend to insure a property that is used for commercial purposes, then you will need to find a local insurance broker that specializes in this field and get a detailed quotation for coverage.

It’s also important to note that if you use your residential home for any commercial activity (other than a home office) or rent part of your property while you are still living there (known as “simultaneous occupancy”), then this too will require a commercial policy, which is more complex and expensive than a policy designed to cover the risks of a residential dwelling house.

Learn more about caring for and insuring your home in Mexico

Mexperience publishes extensive information to help you plan and care for your home life in Mexico through guides, articles and free eBooks:

• Free guide: House maintenance and home security
• Latest articles about property insurance
• Articles about real estate in Mexico