Your US car insurance isn't valid in Mexico and yes you must have coverage for your car while in Mexico which can be purchased at the border . At the border we paid a huge amount for 30 days coverage . We were able to purchase a years coverage for less than we paid for 30 days after arriving in Ajijic.It has been said that you can be deported if you dont have insurance on your car but don't iknow if that is true . One thing for sure is you want to be legal .