Mexico has harsh laws when it comes to its citizens driving foreign vehicles within its borders or across the border. The rules surprise the average U.S. citizen (and Mexican citizens not familiar with the law) and can make a huge dent in your pocketbook, or worse, you could lose your vehicle permanently.
Check to be sure your Mexican insurance company will cover Mexican licensed drivers. Some do and some do not. Mexican insurance is a specific insurance program for tourists and visitors.
Baja Bound's policies, underwritten by HDI Seguros and Chubb Seguros, do allow Mexican licensed drivers, but the primary driver listed on the policy must be a U.S. citizen.
Important: Although some Mexican policies do cover Mexican licensed drivers, it is important that a U.S. citizen is still present in the vehicle. The Mexican authorities in Northern Baja have been cracking down on Mexican citizens driving U.S. plated vehicles without a U.S. citizen inside the vehicle. Vehicles have been confiscated and insurance does not cover this risk.
The most surprising reason is in regards to Mexican customs law. As is common knowledge, a U.S. citizen may freely cross into Baja with a U.S. plated vehicle. However, if a Mexican citizen crosses into Mexico with a U.S. plated vehicle and there is no U.S. citizen in the vehicle, there is a chance that Mexican customs officials will notice and send the Mexican citizen to secondary inspection. Upon checking documentation, if the Mexican citizen does not present U.S. documentation, the vehicle will be permanently confiscated by Mexican customs with very little chance of recovering it. In addition, the Mexican citizen will incur a huge fine of 80% of the vehicle's value. This fine must be paid or it will be on the Mexican citizen's record.
This may sound unbelievable, but it happens. A look into Mexican customs law helps one understand how the situation is viewed by Mexican customs and the reason behind the fine. When a Mexican citizen drives into Mexican territory with a U.S. vehicle and no U.S. citizen in the vehicle, Mexican customs sees this as attempting to smuggle the vehicle into the country. Since the vehicle is viewed as "contraband" it will be confiscated just like they would confiscate any other type of contraband. Being that it is illegal to bring contraband into the country, the offender will have to pay a fine. In the case of the vehicle, it will be 80% of the vehicle's value.
Mexican authorities, such as transit authorities can impound a U.S. vehicle driven by a Mexican citizen without a U.S. citizen present. If this happens, you may get the vehicle back by having the owner present himself with the vehicle title before the authorities.