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Drivers of vehicles in Mexico should update Third-Party Liability Limits
Tue, 29 Oct 2013 14:31:36 -0700The
reform which became effective on December 1, 2012 represents the first major
changes to Mexican labor laws in more than 40 years. It eases legal constraints
on a company's ability to hire and dismiss, lifts the ban on part-time
employment, and allows probationary periods for new hires and caps the amount
of money a company must pay to laid-off workers.
The most important change relating to insurance is
that the Mexican Congress established an increase in the amounts of indemnities
in the event than an individual causes death to a third party. This change is
stated in the Federal Labor Law (article 502) in which the death benefit
increases substantially. Prior to November 30, 2012, the indemnities were based
on “Seven Hundred and Thirty (730})days of The General Minimum Wage or the
highest Professional Minimum Wage”, plus funeral expenses.
The new Labor Law states: “Article 502. In case of
death, the compensation due to persons shall be the amount equal to the amount
of “Five thousand {5000} days of The General Minimum Wage or the highest
Professional
Minimum Wage”, plus funeral expenses. As a result
of this change, the liability exposure has been multiplied by two, three and up
to four times, depending on the state where the accident occurs.
For example, under the old law, after an accident
causing a fatality, the insurer had to pay approximately the equivalent of
US$46,000 per deceased person (this amount varied depending on the State of the Mexican Republic where the fatality
happened). Under the new law, the insurer must pay MX$3,779,416 (the equivalent
of US$295,000) per deceased person.
Given the significance of the Labor Reform, ABIS
Group recommends that all Auto Liability Limits be increased to at least
US$300,000 USD to meet the minimum required as per the law states. For further
information, please contact Mario Rivera at mario.rivera@abis-group.com or
(800) 554-2247.