Puerto Rico requires every vehicle owner to carry liability insurance in order to operate a vehicle on its public roads. As such, it behooves any current or future car owner to be somewhat familiarized with the laws and practices regarding car insurance in Puerto Rico, as they can be somewhat different than those on the mainland. If you are a new resident of the island, you will likely also want to have health and renter’s insurance, and in that case you should consult with an insurance agent to start developing your package. Let’s go over the top things you should know about buying insurance in Puerto Rico:
Things to know: Buying insurance online is not very easy in Puerto Rico
Before you dismiss this statement because it is coming from an insurance broker, let me just say that I would love for Puerto Rico to be better integrated technologically and for consumers to have choice. Some companies, such as Velox (you can also buy Velox policies through us), are attempting to change this and have made great strides in developing a better technical platform, but we are still ways away in Puerto Rico from being able to have a fully online journey. I.e. even if you buy through Velox or Popular Insurance, you will still need to send a myriad of pictures and documents in to complete your policy purchase.
If you are looking to purchase a car insurance policy, you can contact us here for a no obligation quote; we work with all the major carriers in Puerto Rico and can give you a good sense of the market.
Caution: When buying an insurance policy, remember that 6 month car insurance policies do not exist in Puerto Rico as is commonplace in the US. Instead, policies in Puerto Rico are sold for 12 month (1 year) terms. Some companies, such as Universal, do provide payment plan options, but most require upfront payment for the year.
If you’re purchasing a double interest policy at the dealer, which I’ll get more into later on in this article, these policies are typically financed in the auto loan itself. As attractive as this sounds, I strongly recommend you don’t choose a double interest policy, as they have some serious drawbacks.
What is the Compulsory Liability Insurance, and does it apply to me?
The “Seguro Compulsorio”, Compulsory Liability Insurance, or Universal Car Insurance in English, is the minimum possible insurance required by law in Puerto Rico. It comes along with your “marbete”, which are the equivalent of the license plate tags in the US, except it doubles as bare-bones insurance. Your marbete is your proof of compulsory insurance; therefore, if you have an expired marbete, you have no compulsory insurance coverage.
For compulsory insurance, it used to that be that only the ASC (Asociacion de Suscripcion Conjunta), provided the $4,500 liability coverage, but as of a couple of years ago, the consumer can now choose between a variety of providers. Some companies, like PointGuard, differentiate themselves by providing 24/7 call centers, while others like MAPFRE, offer “expanded compulsory insurance” which include some modest upsells like increasing liability coverage to $20,000. Generally, all of the compulsory insurance options are grossly overpriced for the coverage they offer, even if you max out all the upsells. More worrying than how overpriced they are is how exposed you will be – a $4.5k limit will only cover the most minor of fender benders.
When you purchase your marbete, $99 of those dolllars will go towards the compulsory liability insurance. If you have private insurance already, you can ask your insurance agent for a “voucher” which certifies that you are exempt from purchasing this compulsory insurance. If you weren’t able to get the voucher in time and had to pay the $99 when you purchased your marbete, don’t worry you can still contact your insurance agent for the voucher and ask him or her how to get the refund retroactively. You’ll get about $86 dollars back in a check. It may take a few weeks or months to go through, but it will go through.
How do I renew my marbete digital?
If your car is less than three years old (updated in a legislation from 2024), you can renew your marbete directly on the CESCO Digital app and do not need to get the car inspected to renew. The system is supposed to identify your car via VIN number and detect if you have private insurance, automatically waiving the $99 compulsory insurance charge, but in my experience this is hit or miss. If the system doesn’t find your private policy, you should obtain your insurance voucher from your agent and buy the marbete at a physical location. The easiest place to buy a marbete is usually at any bank.
If your car is older than three years, then you will need to get it inspected. You can search on Google for “Centro de Inspeccion” and pick the most convenient to you. Bring your vehicle registration and your insurance voucher so you can also purchase the marbete right there in the same visit. Try to do it at the beginning or middle of the month as multi hour lines nearing the end of the month.
What is ACAA insurance and do I need to pay it?
When you go to renew your marbete online, you will see a prompt to choose one of three ACAA coverage options. Do not be confused with the compulsory insurance, ACAA is a separate coverage and is mandatory for all drivers – it is not waived with private insurance. ACAA is a government run nationalized insurance service that provides medical services and compenstation for victims and dependants in the event of a car accident. They have a $35, $50, and $70 yearly option that you will select when you renew your marbete.
What are the different types of car insurance available in Puerto Rico?
- Liability Insurance – This policy can be public or private – the Compulsory Insurance is a type of liability insurance.
- Double Interest Car Insurance – Usually the minimum required by the bank, typically sold at the car dealership.
- Full Cover – Comprehensive, includes the coverages of the other policies plus coverage for your own vehicle even if the accident is caused by you.
- Gap Insurance – Used in conjunction with another policy when the loan balance is higher than the value of the car.
Do I need gap insurance?
You typically need gap insurance if you buy a new car and give less than a 20% down payment.
What does the typical private car insurance policy cover?
It is common for car insurance policies on Puerto Rico to follow the familiar 100/300 standard used in the US. Specifically, this means that the policy can cover $100,00 of bodily injury by a single claimant, but will cover no more than $300,000 in aggregate for all claimants. Comprehensive insurance will cover anything, whether at fault or no-fault, as long as the deductible is paid which is typically in the range of $500. Additional features such as roadside assistance and rental car coverage are also typically available.
What is a double interest policy?
A double interest policy is typically sold at the dealership at time of sale, and is so named because the policy protects the bank’s or auto financer’s interests as well as that of the owner. It is a bit of a misnomer because it really only adequately protects the bank. All it really does is pay the loan balance off in the event of a total loss.
This is because this policy only covers the depreciated or Actual Cash Value (ACV) of the vehicle at the time of an accident. Unless the buyer paid a sizeable down payment at purchase, the balance is loan balance is usually either fairly close to the ACV of the vehicle or it is more than the ACV. In the event that the balance of the loan is more than the car is worth at time of loss, the owner of the vehicle is responsible for the remainder. In cases where the buyer pays little or no down payment, he or she usually needs a “Gap” insurance, a supplemental insurance meant specifically to cover this gap.
A double interest policy has no liability coverage, and many buyers end up running their car with only the compulsory liability insurance, leaving them underinsured.
The other big downside of double interest policies, which some people sell as a plus, is that the policy is financed into the loan and runs for the term of the loan. For example, if you buy a car with a 6 year loan and get a double interest policy, you are effectively buying a 6 year car insurance policy and financing it into the loan. Even on an inexpensive car this will easily be $5-$7k that you will be adding to the loan balance at today’s high interest rates.
Once you go with a double interest policy, you are stuck with it until the loan is paid off. If you have a bad experience with a claim and want to switch insurance companies, you are out of luck.
Does my Puerto Rico car insurance cover me in the United States?
Yes! PR car insurance policies will provide coverage when you are renting a vehicle in the US up to the limits of your policy. That is, if you have 100/300/100 liability limits, the same limits will apply to the rental car. If you have a $25,000 car insured in PR, and you rent a $60k car, then you will need some supplemental insurance as the policy will only cover up to the $25,000 limit.
Best practice when you are planning on renting a car in the states is to ask your insurance agent for a certificate that covers the dates that you will be renting the car. This helps things go smoother as many car rental companies in the US are unfamiliar with coverage in PR and can not easily call to verify coverage as they can with the mainland carriers.
Does my US car insurance cover me in Puerto Rico?
Unlike PR policies that do provide coverage in the US, I have yet to see any US carriers that provide coverage in PR. You can call your carrier to confirm, but in my experience none of them do. The only exception to this is if you have an Umbrella policy, then that will also cover here as Umbrellas provide international coverage. You may also have rental car collision coverage through your credit card.
I’m shipping my car to Puerto Rico, what insurance do I need?
If you are shipping a car, then the insurance during the voyage will typically be supplied by the transport provider, i.e. Crowley, etc. Once the car lands in PR and is undocked; however, you will not have coverage. Here you will run into a catch 22 because most insurance companies will require the car to be registered in PR before they will insure it, but to do that you will actually have to drive your car and wait at the very least a few days for that process to complete.
What I have found is that there are some companies that will insure it with your mainland registration and then update your policy once you obtain your PR registration. If you are shipping your car, I suggest you contact us so that we can insure you with those companies and minimize any gap in coverage you may have.
If your car is financed and has a lien on it, the first thing you need to is to contact your lender and see if they will let you ship the car. Many won’t and you’ll have to pay it off. Others will require you to have a PR policy bound before the car lands on the island, but none of the PR insurance companies will do this so it is actually not a real option.
Also consider the taxes when importing a car to PR, as they can be much higher than you may be expecting.
Is there non-owner car insurance available in Puerto Rico
No, personal non-owner car insurance does not exist as a product in Puerto Rico. Non-owner car insurance exists for commercial policies, but not for personal lines. I have had many people call me because they are looking for a less expensive option than the rental car insurance provided by the rental car company, but this just simply isn’t available here. To buy personal car insurance, you need to have your name on the title of a vehicle.
How much is car insurance in Puerto Rico?
The price of car insurance will vary based on many factors such as age of driver, amount of coverage being purchased, and the value of the car itself. As a general rule, you can expect rates to be similar to lower cost areas of the United States. A typical full coverage policy, for example, for a car worth around $20k with a driver over 25 years old will usually cost between $800 and $1,300 per year.
Insurance for Luxury Cars
Obtaining insurance for luxury autos has its own special considerations. Given the size of the purchase, we’ve devoted a whole article to luxury car insurance in Puerto Rico. We invite you to read that article if you’ve purchased or are considering a car worth more than $70,000.
Insurance for Used Vehicles
Insurance for used cars in Puerto Rico works in the same way as insurance for new cars – you consult with your insurance agent, they provide you with a quote and once you are satisfied you pay your policy.
Some specific details about used cars to keep in mind when shopping for insurance include:
- The roadside assistance benefit is not available for cars manufactured before a certain year. The age limit can vary between auto insurance companies, but in general if your car is over 10 years old it will not qualify. In these cases, you can purchase this service directly from a roadside assistance company such as Connect Assistance.
- Once the car depreciates a certain amount, there comes a point where it is not cost effective to acquire a “full cover” policy. Let’s take the example of a vehicle with a market value of $ 4,000. Let’s say a full cover policy costs $ 500 and a public liability only policy costs $ 100 for this vehicle (hypothetical numbers). If you cause an accident, you will have to pay a deductible (typically $ 500) before the insurance company will pay a claim. Usually, when the damage from an accident reaches 40% of the value of the car, the car is declared a total loss. In other words, in this case, a repair to your car will only be covered if the damage in an accident is between $ 500 and $ 1,600 – a very small window. In the event of a total loss, the company will give you a check for the current value of the car less the cost of the deductible.
- For these older vehicles, a great option many times is to obtain a “collision-only” policy that provides limited coverage at a very low cost. Standard premiums that range from $89 to $100 a year get you $4,000 in property coverage for your own vehicle with deductibles ranging from $100 to $200. These policies can be combined with a liability only policy and can get your older vehicle adequately covered. These policies are not the equivalent of a full cover or comprehensive one, so they will exclude things such as a tree falling on top of your car or a rock breaking your windshield. In order to qualify for this kind of policy, the vehicle must usually be worth less than $30,000 and the car can not weigh more than 10,000 pounds (in the case of pick-up trucks and vans)
Requirements for purchasing a policy
The information your insurance agent will need in order to provide you an auto quote will be:
- Current value of the vehicle
- Make, model and model year of the vehicle
- Cost of the vehicle when it was new (if the vehicle was purhased in the US and imported, this cost would be the hypothetical cost if the car had been purchased in PR).
- Age of the driver
Once you obtain a quote, in order to actually purchase and issue the policy, the insurance company will need:
- Vehicle registration
- Postal address of the insured
- Full name of the insured
Know what you’re getting into before you walk into the dealership
The dealer will try to sell you a double interest car policy no matter what, so it is a best practice to give your insurance agent a heads up when you’re shopping for a car and he or she can let you know your options.
A double The bank doesn’t care if you get stuck with a $20k liability bill after you get an accident and your compulsory liability will only cover $4k, they only care that the loan balance will be paid off.
That’s it for now! I will continue to update this post over time with more information to help you out. I hope you found this information useful, and if you find yourself ready to explore your insurance options, feel free to reach out to us for a free consultation.
Written by Jaime Arias – Licensed Insurance Agent in Puerto Rico
President of Dynamic Insurance Solutions
Harvard MBA