In Panama Auto policies, the "Liability" or "Responsabilidad Civil" portion protects you for damage that your car does to others…damage for which you are legally liable. This coverage pays for bodily injury that you may cause to other persons, as well as, legal defense, cost of bail bonds, and emergency first aid to others.
According to a local news source: "Beginning in February, police and traffic inspectors will be testing a technological program to verify the status of a car’s insurance policy and soon reporting an accident will be automated. Traffic cops will enter the license plate number into a mobile unit and the system will indicate if the car has a VALID policy something that is mandatory by law. If the car does not have a current policy it will be TOWED".
Although most vehicles sold in Panama do NOT have US specs, you must still consider the import duties when assigning an agreed value to your automobile.
This is a link to check your driving record here in Panama. You will need to have your drivers license handy to submit the control number (small numbers on lower right side):
Several insurance clients have communicated to me that the Panama Transito police have stopped them for an infraction or at one of the frequent roadblocks and asked them to provide various documents. In some cases, the vehicle was impounded for failure to produce a "valid" drivers license,