Homeowners Insurance in New Mexico

New Mexico is the fifth-largest state in the U.S. and has a diverse landscape, including deep forests and vast deserts of white sand. Located in the western portion of the country, it experiences earthquakes, wildfires, and winter storms. The state experiences both extremes of heat and cold and many natural disasters that damage property, resulting in claims and losses for insurers. Since 1953, New Mexico has had 83 federally declared disasters, and the number of disasters per 1 million people is 39.24.

Along with natural disasters (hurricanes, wildfires, and winter storms), one of the most common home insurance claims in New Mexico is for water damage from plumbing leaks. Winter storms can cause ice dams and frozen pipes. Other claims in New Mexico include tree limb damage, theft, liability issues, and vandalism.

No state or federal home insurance requirement exists, but experts agree that everyone who owns property in New Mexico, should have at least some coverage. If you buy a house in New Mexico and finance it, your lender will require you to purchase homeowners insurance and keep it active for the length of the loan. They will also dictate the coverage levels.

A typical homeowner in New Mexico pays an average of $1,847 per year, which is still far less than the national average of $2,728 per year. However, it is not the cheapest in the U.S.

Insurance providers choose which states to operate in and what types of coverage to offer based on the possible perils. In New Mexico, the available types of coverage are as follows:

Although flooding isn't a big concern in New Mexico some residents may want to consider a policy for floods and an umbrella policy to fill in any gaps in coverage.

FEMA (Federal Emergency Management Agency) manages the National Flood Insurance Program (NFIP) through a network of 50 providers across the U.S.

Since most homeowners insurance does not cover floods, this supplemental coverage can repair damage and replace items after a flood. Depending on the options you choose, it can cover the building and/or your personal belongings. This program is available to homeowners, renters, and businesses. Learn more about the program on FEMA's website.

Severe weather is becoming more commonplace across the United States. These frequent natural disasters are causing massive claims and losses for insurance providers. Climate change is the number one driver for home insurance rates today, and they are constantly climbing. Over the past five years, rates have spiked by 34% and even as high as 60% in some areas, making it harder for homeowners to find coverage. In New Mexico, rates have increased by 35.5%, slightly higher than in most locations.

New Mexico has a mixed bag of weather events, including hurricanes, wildfires, and winter storms. Even one fire claim costs insurers an average of $77,340. Water and ice damage costs an average of $11,650 per claim, and wind and hail $11,695 per incident. From 2015 to 2019, insurance providers in New Mexico lost a total of $357,842,800. From 1980 to 2024, New Mexico had 36 federally declared disasters. In 2023, the state had 23 tornadoes, and in 2022, New Mexico had a whopping 748 wildfires that destroyed 859,906 acres of land.

With home insurance costs rising steadily, New Mexico residents are constantly trying to find ways to save money. First, you need to understand the factors impacting home insurance rates and then adjust from there.

Some ways to save on homeowners insurance are:

• Raise Your Deductible: Raise your deductible as high as possible to lower your rates.
• Improve Your Credit: Boost your credit and then ask your insurance agent to re-evaluate your rates.
• Eliminate Risks: Eliminate as many risks as possible to lower your home insurance rates.
• Bundle Policies: Bundle your home and auto policies, and your carrier will usually give you better rates.
• Don't File Small Claims: Avoid filing small claims; wait for the big stuff to keep your rates low.
• Shop Around: When looking for a provider, shop around. Ask for recommendations and balance quality with price.
• Make Your Home Disaster-Resistant: Improve your roof, siding, and windows to make your home more weather-resistant and lower your rates as a bonus.
• Ask for Discounts: Ask your insurance agent about any discounts they offer.
• Remain Loyal: Stay with the same insurance provider for many years, and they may reward you with lower rates.
• Improve Home Security: Install a home security system to keep your home safer and lower your insurance premiums.

Home insurance protects your home against disasters. You find a provider, select your coverage, and buy a policy. After a qualifying event, the insurance company pays to repair or rebuild your home to its normal condition. Most home insurance policies also include personal property protection, liability and medical payments coverage, other structures, and loss of use protection.

You can easily get a policy by selecting a provider and contacting them through their website (apply online) or calling their 800 number. You may also want to find a local agent to help you select coverage for your specific situation. Once you purchase the policy, you must pay the first year in advance. After that, you can pay monthly through your mortgage escrow or once a year, depending on whether you have financed your home or not.

The most common typical home insurance discounts offered by most insurance firms include:

• Senior Discount: Retirees and senior citizens often pay less for home insurance due to discounts related to age.
• Military Discount: Many firms offer home insurance discounts to military personnel (active and retired).
• Job-Related Discount: Government workers, firefighters, and teachers get discounts for their occupations.
• Non-smoker Discount: Non-smokers earn a discount for having a lower fire risk.
• Loyalty Discount: If you stay with the same company for many years, they may offer you a discount year after year.
• Autopay Discount: Sign up for autopayments, and your insurance provider may offer a discount.
• Paperless Discount: Opt-in for paperless billing, and your insurer may discount you.
• Multi-policy Discount: Bundle all your insurance with the same provider, and they may offer you a discount on your rates.
• Home Safety Discount: Improve your home safety with sprinklers, smoke alarms, and fire extinguishers to qualify for a discount on your home insurance.
• Security Discount: Install a home security system to keep your home safer and earn a discount.
• New Home Discount: New homes cost far less to insure than older homes.
• Green Discount: Install green appliances throughout your home and help the environment while earning a discount.
• Claims-Free Discount: Stay claims-free for as long as possible to earn home insurance discounts.

Common Rates Offer by Homeowners Insurance Firms

New homes cost much less to insure than older homes. Some homeowners pay 40% less; even five-year-old homes cost 26% less to insure. In New Mexico, residents pay an average of $1,045, which is quite fair, but your actual cost will depend on things like the size, age, and condition of the house, your credit score, deductible, the firm you choose, and other factors.

Top 10 Home Insurance Firms in New Mexico and Average New Home Savings

Home renovations can improve the exterior and interior of your home, making it stronger and more attractive, but they can also affect your home insurance rates. Some upgrades increase the value or risk and raise your rates along with it. Others make your home safer and lower your rates. Some upgrades do both simultaneously, causing no effect on your rates.

Home Renovations that Increase Rates

Some home renovations that increase your rates include:

• Putting in a Pool: While adding a pool may delight your family, it will significantly increase your insurance rates.
• Building an Addition: Adding square footage will make your home larger and make room for everyone, but your home insurance rates will also increase.
• Finishing the Basement: Finishing a basement is a nice touch, but replacing your house after an event will cost more, increasing your premiums.

Home Renovations that Decrease Rates

Some home renovations that decrease your rates include:

• Install Smart Home or Security System: Installing a smart home or security system can keep your home safer, avoid costly claims and disasters, and, as a bonus, lower your insurance rates.
• Shatterproof Windows: Installing shatterproof windows will make your insurance company happy, and they should lower your rates as a result.
• New Wiring: Old wiring can be a real fire hazard, and if you are proactive and replace it before it becomes a problem, your provider will lower your insurance rates.

Replacing your siding can strengthen your home, make it more weather-resistant, and lower your rates, but using expensive materials could raise your rates, canceling out any discount.

Standard upgrades and renovations are not covered by home insurance. Insurance companies only pay to repair or replace your home after a qualifying event. If someone gets hurt during the renovation on your property or steals from you, those things are covered under your policy. Other things not covered are rodent damage, animal damage, and pest infestations.

Always discuss any renovations with your insurance agent before starting work. They can help you understand how the project will affect your rates and coverage and if any changes are necessary.

Renters insurance covers people who rent homes like houses, apartments, and condos rather than buy them. It does not include any dwelling coverage; the property owner must handle that. Renters insurance primarily aims to protect your personal property from theft or destruction. After a covered peril, the insurance company will replace your personal belongings. Most policies also include liability, medical payments, and loss of use coverage. Each policy has limits, and expensive items like jewelry and other valuables may not be covered.

Some covered perils include smoke, fire, theft, hail, water damage (burst pipes), vandalism, and windstorms. The things that renters insurance will pay to replace include:

Renters insurance providers base their prices on three main factors:

The average cost of renters insurance in the U.S. is between $15 and $20 monthly. The average rate for renters insurance in New Mexico is $11.64 a month or $140 a year, which is less than the national average.

Condo insurance is for condo owners and protects their homes against qualifying events. It works differently than homeowners insurance because the condo association and unit owners share the dwelling coverage. Each condo development has its own master policy, which pays to repair or replace each building after a disaster. However, the master policy will restore it to its original condition (when first built), which is not its most recent. Condo insurance pays to replace the interior and bring it back to its most current condition with any upgrades. Condo insurance also includes personal property protection, liability, medical payments coverage, loss of use, and loss assessment.

Unlike renters insurance, condo insurance does have dwelling coverage, but it only applies to the interior. Also, the liability portion only works if the person is hurt inside the condo, not outside or on common grounds.

Condo insurance will pay to replace the following items as well as others:

• Furniture
• Appliances
• Flooring
• Cabinets
• Countertops
• Wiring
• Plumbing
• Interior Walls
• Light Fixtures
• Personal Belongings

The average cost of condo insurance in New Mexico is $34/month or $408 a year for $60,000 in personal property coverage and $300,000 liability coverage with a $1,000 deductible.

Some tips for saving on your condo insurance include:

• Ask About Discounts
• Compare Rates/Providers
• Improve Your Home's Safety
• Boost Your Credit Score
• Raise Your Deductible
• Bundle Your Policies
• Remain Claims-Free
• Stay Loyal to the Same Provider
• Review Your Coverage Each Year

Although insurance provider losses keep piling up in states all across America, in New Mexico, there appears to be no strong pattern or trend. Some years, insurers lose money; in other years, they profit. However, that story may change in New Mexico as climate change continues to dictate frequent weather events. If that happens, providers may shy away from working with risky clients and limit coverage, making it harder for residents to find insurance.

New Mexico experiences many different types of natural disasters, from hurricanes and wildfires to heavy winter storms, which can lead to various claims. If trends continue, the state may start to see more frequent disasters and accompanying losses, slimming competition and impacting the insurance industry.

No federal agency regulates the home insurance industry. Instead, state departments regulate insurance providers within the region. They monitor rates and customer relations, ensuring fairness and legality. They also follow up on customer complaints and sanction guilty firms. In New Mexico, that state agency is the Department of Insurance with an address of P.O. Box 1269, Santa Fe, NM 87504