Update
As I suspected, I was simply mugged by the cops.
Several days ago I ran into a Canadian biker who's been working in Peru for several months; he's tried to obtain vehicle insurance (accident/liability) for his motorcycle but hasn't been successful at it. Currently no vehicle insurance, but he shows them his Canadian insurance certificate when asked. Locals have no idea what it means.
Last Sunday I was at a gathering of Peruvian bikers outside Lima. I told them the story, they all laughed about my experience to a common Peruvian situation. They suggested I always make sure to carry small bills. Often a 20 Sole (less than $7) note does it (to resolve the matter with the police), occasionally 40 is required. Just my dumb fault for only having a 100 Sole note in my wallet.
In no way do I endorse paying mordida. In previous situations I've been able to call their bluff and get away relatively quickly. Not this time. I should have done a better job of figuring out the length of ride that day, and not have been caught out that late in the day so far from my destination.
Best thing to do is to get some sort of official looking piece of paper that you can claim is universal coverage from your home country, to flash in such situations. Can't hurt.
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quastdog
Chiang Mai, Thailand
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