Auto Insurance Fraud in Mexico: How to Avoid Being a Victim

With more than 100 insurance companies in Mexico and many of them offering auto insurance, you have a wide range of options to choose from. But the insurance agent you chose just encouraged you to pay cash for your new auto policy. While it´s true, we do pay a lot of bills in Mexico in cash, your insurance should not be one of them as it increases your risk of falling victim to insurance fraud.

What kind of fraud can occur?

One example of auto insurance fraud that occurs is often referred to as ¨carousel fraud¨ and can only occur when you pay cash for your policy.  When an auto policy is issued, there is a 30-day grace period to pay the premium that begins on the effective date of the policy. During these 30 days, the vehicle is covered by the insurance company that issued the policy. However, before the 30 days expire, the fraudulent agent insures your car with a different insurance company without paying the first company. They will do this each month for the entire year, never paying your premium to the insurance company and instead pocketing the cash you gave them.

Yes, technically your car is covered the entire year. However, you will not be insured with the original company you chose, you won´t have a certificate of coverage to know exactly what you´re covered for, and you may even have less coverage than you expected.

Important: Insurance agents cannot change the insurance underwriter without your authorization in writing. If they are suggesting a change in underwriters, they must provide you with an explanation as to why they want to make the change. Additionally, the effective date of the policy should start from the moment you authorize the change, not before.


How can you protect yourself?

  • Never pay your policies in cash. Always use a card or deposit the money in the bank to the account of the insurance company, which should be on the certificate of coverage or premium notice.
  • When you pay the policy, always ask your agent for a copy of the proof of payment or confirmation of payment issued by the insurance company. It’s a document that confirms the payment and has either a signature or stamp from the insurance underwriter and has your name and policy number.
  • Call the insurance company directly and confirm that your policy is not only in force but has been already paid.
  • Always contract insurance with agents or brokers that are authorized to sell insurance. In many cases you could be doing business with sales people and not actual insurance brokers.


The Guardian Insurance MX team prides ourselves on our professionalism and commitment to our clients. We are happy to provide you with a free quote for a variety of options.

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