The Basics of Condo Insurance for Expats Investing in Mexican Real Estate
Whether you are buying property in Mexico as a home or an investment, you have already discovered the high investment potential of Mexican real estate and will want to protect it.
Some expats have put every cent they have into their new dream home and are looking forward to retiring in the warm weather. There are also expats who think of it as a business, buying one or more vacation rentals that create revenue while they are back home. As a property owner anywhere you need to purchase homeowners insurance to protect your investment, Mexico is no different.
One difficulty expats experience is finding an insurance company that covers your investment in the same manner which expats have come to know back in the US or Canada. Finding a company you can rely on and trust, and knowing that if your investment is threatened, they will back you up, is key when determining who to use.
Find a company that provides equal service as American or Canadian companies, who are located and licensed to sell insurance in Mexico. Some Mexican companies may not offer you the same protection. Know your options; there are many choices for home insurance in Mexico, and many companies from the US or Canada offer homeowner policies on Mexican homes. They may offer a better price and more coverage.
When investing in a condominium, review the condo association’s commercial policy. The policy will typically cover the complex structure, common areas, and swimming pool. They do not cover your unit or your belongings. Read the fine print regarding what is included in the complex´s policy and what is your responsibility to cover. Do not assume you are protected by the complex´s policy. For instance, if your bathroom leaks into another suite you will be responsible. It is important to purchase insurance to complement the complex’s insurance policy.
If your Mexican home will be used as a rental long-term or even occasionally, make sure you have rental insurance. Renting out your condo while you are back home is a great way to offset costs and gain revenue, but one accident could cost you your home. Protect yourself from liability. Should a tenant be injured on your property you may be liable for their medical expenses plus lost wages. If you rely on your rental property income, you may want to include a “loss of use” risk in your policy.
The “loss of use” coverage can be broken down into two categories. One is “loss of rental income” if you are claiming loss of revenue due to damage you will have to provide proof that the property would have been rented out during this time. An example of evidence of loss would be a long-term rental agreement or reservations through a website such as Airbnb. Or the properties previous rental history, for instance, loss of use during high season.
The second category of “loss of use” would be extra living expenses, if the owners themselves cannot live in their home, they will be reimbursed including hotel and other costs.
Earthquake and Hurricane Coverage
Expats investing in property along the Caribbean or the Pacific Coast should consider hurricane insurance, in the past, this feature was regarded as an expensive add-on, but many companies are making hurricane coverage more accessible.
In some areas of Mexico, earthquakes are quite common, depending on your location you may consider earthquake insurance. Although incidents causing extensive damage caused by earthquakes is rare, even a relatively minor earthquake will cause damage that is expensive to repair. Research the area to find out if you are at risk.
Home Contents, Personal Goods and Chattels
What does your policy cover as far as home contents?
Imagine you had to replace everything in your home, TVs, computers cameras and other electronics, furniture, clothing, bedding, kitchen wares, and jewelry. If you think about the things we accumulate over time, it would be costly to replace them all at once. Review the policy limits; you may require extra coverage for specific items. Ensure you are covered for theft, water damage, and fire.
An inexpensive feature you will want to add to your policy is power surge coverage. Typically we think of a power surge protection for computers and electronics, but surge protection also protects your air conditioner, washer and dryer, and other expensive appliances.