American and Canadian car insurance is rarely valid in Mexico, and the Uninsured Motorist (a dreaded term anywhere) is particularly vulnerable both to imprisonment and costly legal action. We strongly recommend that you get Mexican insurance that covers your vehicle for the duration of your trip to Mexico.
Do Mexican insurance companies actually pay off in the event of an accident? Absolutely! We personally know several people who were involved in accidents and had to call upon insurance agents for help inside Mexico. All of them gave very positive reports of the service and support they received. In one case, an insurance agent made arrangements for a friend and her pet to stay with a Mexican family while her truck was being repaired.
(The paragraphs above are excerpted from The People’s Guide to Mexico.)
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