INS Automobile Insurance Primer
In this country, auto insurance is different from policies in other parts of the world. The thrust of this article is to highlight those differences and to outline the National Insurance Institute (INS) auto policy.
Ownership. Insurance should be in the name of the legal owner of the vehicle, one policy per vehicle. If you sell your vehicle, you can have it removed from the policy and simultaneously put your new car on the old policy. Or you can write a letter requesting cancellation of the policy, and INS will process a partial refund.
License. Anyone with a valid license can drive an insured car, and the policy will automatically give protection. “Valid license” means a Costa Rican license or a foreign or international license if the driver last entered the country fewer than 90 days ago and is 18 or over.
Obligatory Auto Insurance. All cars on the road have obligatory insurance. (Am I stating the obvious?) The Seguro Obligatorio Automotor, known by its initials SOA, comes automatically with vehicle registration and is renewed every December when you pay your car’s road tax (marchamo). The obligatory insurance affords a tiny bit of personal liability coverage – in other words, if the person driving your car hurts, kills or maims another person, INS will care for the injured parties at their clinic. The amount of coverage is so small (¢1.5 million – that’s about $3,000 – maximum per accident) that I encourage you to consider the SOA as another tax; all it really does is make it legal for you to drive your car on Costa Rican roads.
Supplementary Auto Insurance. If you want real insurance, you must buy a supplementary auto policy. Roughly 20% of cars have the supplementary; this means that about 80% have only the obligatory –which isn’t real insurance in my humble opinion. The supplementary coverage is optional, so nobody has authority to request to see your policy. (But carry your policy number; it helps to have it handy if you have an accident.)
Inspections. All new insurance or policy changes require the applicant’s signature on the appropriate form, an inspection of the car, a review of its latest Riteve inspection sheet and four photos of the vehicle, one of each side. The exception is policies with only liability coverage (A+C; see box for explanation of all coverage categories), for which no photographs are needed.
Insured Value. Cars should be insured at their market value in Costa Rica, and it is up to the insured to set the value and keep it updated. Too high, and you are throwing premium money away; too low, and you will certainly save some premium money, but your insurance coverage may not perform adequately if you have a claim.
If you didn’t recently purchase your vehicle, there may be some difficulty in setting the value. There are several methods: the classified ads in the daily La Nación are helpful – find an ad for a car similar to yours, shave off 5% or so and use that value for your insurance; the useful Web site www.crautos.com; and, for the last couple of years, the INS catalogue of vehicle values, similar to the Blue Book in the United States, which is somewhat incomplete and not updated very often but provides a useful guide.
Lately INS has occasionally rejected auto insurance applications in which the value of the vehicle is substantially different from the value in its catalogue. Ask your insurance agent for the value recommended by INS for your vehicle. Note: only you can change the value on your policy. INS will not automatically reduce the insured values of vehicles as they depreciate, so you should keep an eye on the insured value vis-à-vis the market and update the policy from time to time. To do this, contact your agent at policy renewal time – but before expiry, as INS doesn’t allow policy changes during the grace period.
Renewal. Auto insurance is normally for six months, after which you have a grace period of 10 working days to pay for renewal. After that, you would have to apply for new insurance and repeat all the red tape, inspection, etc. If you have an accident in the grace period, renew before claiming.
Premiums. A bunch of different factors are taken into account to establish a premium: whether the vehicle is owned by a person or a corporation; a car or a commercial vehicle (pickup); diesel or gasoline; the model year; whether it was legally imported or the duty is unpaid; and market value. A rule of thumb is that for coverages A, B, C, D, F and H, you will pay about 5% of the vehicle’s market value for six months of insurance.
Discounts and Surcharges. The rule book at INS says that if you do not claim against your policy for two years, discounts in increments of 5% every six months will accrue, up to a 40% discount after six years of no claims. If you have a costly claim for an accident in which the driver of your vehicle was ultimately found at fault, you could lose all or part of your discount. If you have several accidents – or one big one – you may get a surcharge on your premium. The discounts are based on the ownership of the policy and vehicle. For example, if Sam has a policy with a discount and then insures an additional vehicle in his name, the second policy will enjoy the same discount as the first.
New Car Discount. Brand-new passenger vehicles (not pickups, commercial vehicles or buses) of the current model year enjoy a 30% discount off the first six months’ premium, if you get full coverage and insure the vehicle at the dealer’s showroom.
Abroad. For vehicles with Costa Rican registration, coverage extends to all of Central America, from the Mexico-Guatemala border to the Colombia-Panama border.
Deductibles. All coverages have standard deductibles except coverage A, which has no deductible. Double the deductible if the driver is under 22, or in cases of vandalism, birds or accidents on private property.A special type of policy is available with a fixed deductible on coverages D, F and H, but this is only advisable and cost-effective for duty unpaid vehicles (diplomats, etc.).
Alcohol. Policies will not pay for accidents if the vehicle was being driven by a person under the influence of alcohol or drugs, even if the condition did not cause the accident. An alcohol count of 50 mg or more in 100 cc of blood will invalidate insurance coverage, except for liability coverages A+C.
Exclusions. Vehicles involved in any type of race, rally, riot or combat or used for illegal purposes and vehicles being towed or on certain ferries are excluded from coverage. Civil liability incurred by the insured party is covered – see coverages A+C – ut criminal liability is excluded. (This means, for example, that if someone is driving recklessly and runs over and kills a pedestrian, the insurance will not pay to keep him out of prison, but it will pay damages to the bereaved family if the driver is found guilty.)
Accidents. Don’t move your vehicle until the cops so authorize you. Call the police at 222-9245 or 222-9330, and call INS at 800- 800-8000. If the claim does not progress properly, ask your agent to help. (For more info, see TT, Feb. 10, page W5.)
Roadside Assistance. This is free for vehicles less than 15 years old that have coverage D. Call 800-800-7000 (toll-free) if you have a flat, dead battery, are out of gas or need a tow truck. (For details, see TT, Dec. 16, 2005, page W12.)
Special Note for Tourists. When you bring a car into Costa Rica, at the border or port of entry you will be given a permit to drive the car in the country. The permit is usually for three months, renewable once. To be issued a permit, you must state who is going to drive the car – they allow the owner and one other person, usually the owner’s spouse – and no one else is authorized to drive the vehicle. This conflicts with the general rule expressed above regarding insured drivers. INS allows liability coverages A+C only for cars with foreign registration.
There is no hard and fast rule as to which coverages a person should have for his or her car. I have clients with recent-model Mercedes or BMWs who only buy liability, saying, “If that old thing is stolen or damaged in a wreck, I’ll just go out and buy another one.” And I’ve had people who insure up to the hilt a rusted-out refugee from the scrap yard, and I realize that if it were written off or stolen, they would probably have to save their pennies for a couple of years before they could replace it. So, remember the general rule: insure against events that, if they were to happen, you would find yourself financially hard-pressed to overcome.
The most important coverages are A and C: if you don’t get those, INS won’t sell you any of the others. For coverages F or H, you must also have D.
A – Personal Liability. Covers liability established by the courts as a result of death or injury caused by an accident for which the driver of your vehicle was guilty. The benefits are paid once the obligatory insurance is used up. Does not cover injury or death of family members or employees of the policyholder or driver.
B – Family Passengers. Provides medical care to the driver and his family up to the third degree (driver, his kids and grandkids, or driver, his parents and grandparents) riding within the insured vehicle and injured in a motor accident in which the insured vehicle itself was damaged. Important detail: INS provides the medical care in its world-class clinic and rehabilitation center, so you do not have the option to ask it to pay for your care in private hospitals such as Hospital CIMA or Clínica Bíblica.
C – Property Damage. Covers damage to property (car, house, etc.) belonging to other people, if the accident was the fault of the driver of your vehicle. Excludes items being transported by your vehicle.
D – Collision. Pays for the repair of your vehicle in case of collision or overturning, (a) if the accident was the fault of your driver, or (b) if the accident was not the fault of your driver but the other vehicle has no insurance and the owner cannot pay.
F – Theft. Covers total theft of the vehicle, or loss derived from the total theft. If the car is recovered, the policy pays for damage and/or missing parts. If not recovered within a month, the insured amount is paid or the vehicle is replaced. Does not cover non-factory accessories or items stolen from the car.
H – Additional Risks. Covers damage resulting from fire, floods, wind, hurricanes, earthquakes, landslides, vandalism, explosions, collision with birds, falling objects, accidents within parking lots or private property, etc.
For more info, contact David Garrett at 233-2455 or email@example.com. Thepurpose of this column is to give the reader abetter understanding of insurance in CostaRica. The opinions and viewpoints expressedare those of the writer and do not necessarilyrepresent the official position of INS.
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