[NOTE: The insurance details mentioned here apply *only* to people with credit cards issued in the United States, and for bookings made via Hertz’s US website.]

One of the most frequent questions I get from travelers to the Yucatan is “Do I really have to buy all that insurance when I rent a car in Mexico?” In general, base rental rates from international agencies can be cheap–sometimes less than $20 per day–but the full insurance package kicks it up to about $50 per day. And most people’s credit cards ostensibly offer rental car insurance as a perk. But is that adequate?

Here’s my experience, based on more than six years of travel there, and more than a dozen car rentals. All but one trip has been completely incident-free, and on this last trip, in September 2009, I got into a small accident. This was mildly stressful, but it turned out to be a great way to test the system!

Since my first trip in 2003, I have been relying solely on my credit card to provide insurance (initially Visa, but now often American Express–both offer 30 days’ coverage; MasterCard’s 14-day limit is not enough for my trips), as I do when I rent a car in the United States. At first, I was too broke to buy extra insurance, and later, once I knew my way around, I figured it was worth the risk–good roads, reasonable drivers and low crime make the Yucatan a pretty safe place to drive. But I admit, I do breathe a sigh of relief every time I return a car intact.

All but once, I have rented from Hertz, and I have never gotten a heavy upsell on additional insurance. I explain I’m using my credit card’s insurance, and they say no problem. The one time I rented from Budget, I also got no pressure to buy the insurance. Back in 2006 or so, I did compare more rental companies, and I noticed that Hertz was the only international rental company that did not say, when making an online reservation, that additional insurance would be required in Mexico. (I just did a cursory check, and I’m not seeing this anymore, at least with Budget or Avis.)

Then, on this last trip, I finally did get into a small traffic accident, which involved another car. I’m 90 percent certain it was my fault, and I did more damage to the other guy’s car than to mine. No one was hurt. We both pulled over out of the intersection; I called Hertz, and the guy called the police. Hertz said they’d send an insurance adjuster immediately, and a motorcycle cop showed up not long after.

The adjuster took down both cars’ details, took some photos and made both of us drivers sign the forms. I took photos of both cars too, just in case. The cop was very kind to me, and didn’t even write me a ticket–“You should get one, ” he said, “but you’re very sweet.” Politeness (and a lot of hand-wringing and apologizing over and over!) wins the day!

It was incredibly lucky that the accident happened directly in front of the Fiesta Americana hotel in Merida–where there’s a Hertz office! So I just drove my car back across the intersection (very carefully and looking both ways!) and took the insurance adjuster’s form into the Hertz office. They looked over the paperwork, and my contract, and said it was all no problem and that I’d hear how much it would cost in about five days (I had two more weeks of my trip left). I got a new car, and was on my way. The whole process, from crash to new car, took about an hour and a half, and everyone was exceedingly kind and polite.

But enough of the soft info. Here’s the hard data: I called American Express later in the day, to let them know what had happened. Again, no problem–they advised me to fill out an online claim, and they’d sort it all out when I closed the contract on the car. No alarm that I was in Mexico, no worry that I didn’t have more than a doc from the Merida Hertz office (they’d taken the adjuster’s form–though I took a photo for my records) or anything. I was just warned that AmEx would pay only for the damage done to my rental car–the damage I’d done to the other guy’s car was my responsibility.

I was a little worried about this, but I figured in all I’d saved in not paying for insurance over the years, I could definitely pay $500 or so out of pocket, and still come out ahead.

But when I returned the car at the end of my trip, I found out I didn’t need to worry. “Our company’s liability insurance covers the damage to the other guy’s car,” the woman at the desk told me when I checked out. Great!

AmEx had advised me not to let Hertz charge my card for the damage–about $800. But I was unable to convince Hertz of this, so signed off on my rental fee plus the damages. Again following AmEx’s advice, I called up the billing department and asked them to lodge a dispute on $800 of the total Hertz charge–this meant I didn’t have to pay this amount on my next bill.

Then I sat back and waited. I could check the status of my AmEx claim online, and after a few weeks, I saw that Hertz had still not supplied a lot of the documentation. I emailed all the extra photos I’d taken, just in case they were needed, but never even got acknowledgment that they’d been received.

About six weeks later, I received a letter in the mail letting me know the claim had been settled, and the charge had been cleared from my account.

So, the whole process was a breeze, and worked exactly the way it was supposed to. The Hertz woman’s comment about their liability insurance makes me think this may be the difference between Hertz and the other international rental agencies that require extra insurance–perhaps Hertz is the only company that carries its own liability insurance? (I wanted to sit down with a Hertz rep in Cancun and get a straight answer on this, but in the end I wound up with someone else who didn’t speak English well, and I don’t trust my Spanish for these things!)

Another detail, however, before you go running out and not buying insurance in Mexico: No one was hurt in this accident. It is true that in Mexico the police have the right to take you in if it seems you’re at fault (the “guilty until proven innocent” approach). So it is possible that if I had injured the other driver (or perhaps even if there had been a dispute over who was at fault), I would have been taken into police custody and forced to post bail if I wanted out.

At this point, though, I’m not sure whether additional insurance would actually help. Would it pay bail money? I have no idea. Would either the car agency or AmEx provide legal advice in such a situation? I seriously doubt it.

So–I wish I could answer all questions, but at least this provides a little first-hand account of a very satisfactory system (if only health insurance worked so well!). Keep in mind that it may be very specific to Hertz and American Express. If you’re curious about any other details, ask in the comments.

By the way: when you use your credit card’s insurance, the rental agency (Hertz and Budget, in my experience) puts a hold of about $7,000 on your card (that’s for the rinky-dinkiest Dodge Atos). That sounds alarming, but…it’s just a hold, not a real charge. (Though, obviously, you do have to use a card with a decent credit line.) Yes, if the car is totaled, presumably the full $7,000 would get charged to the card. But I assume the procedure would continue as I experienced–you can dispute the charge and wait until the claim is settled.

Also by the way: I do not have car insurance in the United States (because I don’t own a car–not because I’m an outlaw!). Occasionally this is mentioned as another reason to buy additional insurance, but again, I don’t think this has any bearing on the situation in Mexico. (Is it true in the US, though? I have had Enterprise try to upsell me based on that argument.)

[EDIT in 2015: Hertz now posts a notice at its pickup counter in Cancun, warning that if you don’t buy the “supplemental liability insurance,” you may be held in jail after a collision, and may not even be able to get “life-saving medical care.” So that does imply that paying for additional insurance would somehow give you more leverage in case of a really bad accident, unlike the one I was in. Though I’m not sure how that would play out on the ground.

Also, Hertz has given the heavy upsell on insurance to many people I know in recent years. The last time I picked up a car, in December 2014, the only way I could end the conversation was by saying, “But Hertz does have basic liability coverage, yes? I’m fine with that risk.” The question, of course, is how fine you are with that risk.]