Brazil Rewrites the Rules for Car Insurance

As insurance costs increase, consumers are looking for alternatives to traditional insurance coverage. In the United States, health care sharing ministries are just one example of an alternative model that some consumers are turning to for managing medical expenses.

In Brazil, a similar model is now operating and legal for automobile coverage. With the approval of Law 213/2025 earlier this year, auto protection associations and cooperatives are now officially recognized in Brazil. They offer car owners a cost-effective option separate from typical insurance coverage.

For years, auto protection associations and cooperatives existed in a legal gray area. While they provided services such as theft coverage, collision protection, and roadside assistance for less, they were unregulated. This led to concerns about reliability and potential insolvency.

The new legislation establishes a regulatory framework that requires auto protection associations and cooperatives to operate under the same government agency that oversees the country’s insurance industry.

For consumers, the change brings greater transparency and security. For businesses, it means increased competition, as auto protection businesses often offer lower prices than traditional insurers.

Despite these advantages, car owners should carefully assess their options. While auto protection and traditional insurance share similarities, they also have key differences that could impact coverage, claims processes, and financial security. It’s also crucial to verify whether a particular association or cooperative is legitimate before joining.

As this newly regulated industry takes shape, drivers now have more choices - but also more responsibility in selecting the right type of protection for their needs.