Do Mexican Nationals Have Access to Auto Insurance when They Relocate to the U.S.?

If you have recently (or not so recently) emigrated from Mexico to the United States, and you wish to drive in this country, depending on the state in which you are residing, you are probably required to have at least a minimum amount of auto insurance.  Obtaining auto insurance may not be as difficult as you think, depending on what your specific circumstances are and where you live.  Here are some of the scenarios.

Licensed, Legal Resident
If you are in the United States legally, i.e., on a work visa, or you have your green card, and/or you are married to an American citizen, you can legally get a driver’s license, buy a car, and purchase auto insurance as easily as any other legal resident.  The only problem for you could be the cost.  When insurance companies have a difficult time verifying your driving history information from outside the country, they tend to see you as posing a (potentially) higher risk, and they will likely charge a higher premium to compensate for that additional risk.  Perhaps a small price to pay for complying with the law and making sure you are financially responsible in case you have an accident.

Unlicensed, Legal Resident
If you are unlicensed, but you are in this country legally, you can, in most states, purchase auto insurance.  One does not have to be a licensed driver to own a car in the majority of states.  And if you own a car, you can buy insurance.  Again, as a Mexican National, your premium may be higher by virtue of your lack of verifiable driving history.  For identification, the insurers will often accept a Passport or a birth certificate.  Some insurers accepts a Mexican matricula consular card as a driver's license substitute.

Illegal “Alien”
I’ve always hated the term illegal “alien”.  It makes me think of little green creatures exiting a space ship.  As a Mexican citizen, you have come to the United States seeking a better life for yourself and your family. You are not always welcomed with open arms here while you try to find your way to legal status.  When it comes to getting a driver’s license, purchasing a vehicle and especially buying auto insurance, there could be some challenges, but in many places, it can be done.

Recently a hot-button issue, illegal immigrants can now get a driver’s license in some states.  Seen as a means of identification and a way to prove you know how to drive, many states are allowing undocumented individuals to apply for a driver’s license.  In New York, Governor Spitzer recently signed legislation allowing those here illegally to get their licenses.  In California, however, Governor Schwartzenegger’s position on licenses for illegal immigrants (he was against them) was the undoing of the last state administration. He has yet to sign legislation that would allow it.  Regardless of whether or not they have a license to drive, however, there is no law in many states, including my state of California, which prohibits an insurance company from selling insurance to an illegal immigrant, whether they are licensed or not. 

Alliance United, a Ventura-based auto insurer in California, provides coverage to what the industry calls "nonstandard drivers." That mostly means people with too many tickets or accidents, but it also extends to unlicensed drivers, and that group is largely made up of illegal immigrants.  About 40 other auto insurance companies nationwide sell to illegal residents, as well.  And though some politicians and immigration policy critics complain that companies like Alliance United and others are profiting by catering to people they contend shouldn’t even be here and shouldn’t be driving (because the vast majority still have no licenses), these insurance companies respond by claiming they are not the license police; it is up to the Department of Motor Vehicles (DMV) to deal with that issue.*  And the DMV contends that it is the car that is being insured, not the driver.  Anyone can buy a car and have it insured, whether they ever get behind the wheel to drive it, or not, and whether they know how to drive, or not, and whether they have applied for and received a license, or not.  To be sure, there are many people that do not even fall into the “undocumented” category who own cars but don’t have a driver’s license, such as disabled people, elderly people, etc.  It is a legal practice to sell insurance to an unlicensed driver.  Period.

Price gouging
Are these insurance companies that sell to illegal immigrants taking advantage of them by charging a lot more than they would for legal residents, most of whom are licensed? 

The average illegal immigrant insurance customer pays less than $1,000 annually for the minimum coverage the law allows in California, according to the CEO of Alliance United, Brian Duffy.*  Many of their clients don't qualify as good drivers under California law and do wind up paying about 20 percent above normal rates. Barred from obtaining drivers’ licenses, illegal immigrants are in that group automatically in California.  So it seems they will sell to unlicensed drivers, which presupposes they are bad drivers, and impose a 20% surcharge.  Price gouging?  You tell me.

Alliance United’s agents earn 10 to 15 percent a year on each policy they sell, so selling to illegal immigrants has been pretty lucrative for them.  And these insureds rarely report minor accidents to avoid contact with authorities, so they make fewer claims than average.  Troy Sathers, long-time owner of Sathers’ Insurance Service in Ventura, says his younger customers like Alliance United because it “provides minimum coverage at modest rates”.*

Final Word
Despite hurdles that must be crossed in some states, more and more illegal immigrants are buying auto insurance.  And the more that do, the more we all will be financially protected out on the road.

*Source: Ventura County Star, June 17, 2007