New Mexico residents aren’t required to buy home insurance by law, but it’s a requirement for most lenders if you have a mortgage. Many factors affect your insurance costs, but location is the most important.
Some New Mexico homeowners can’t buy private insurance because their home is high risk. For example, some people can't insure their home because crime is high in their area. Others can't get insurance because they have bad credit. If you can't buy homeowner's insurance from a private insurer, you may be able to purchase a plan from the New Mexico Property Insurance Program (NMPIP), a last-resort state-backed insurer.
Comparing New Mexico Home Insurance Rates
Homeowner’s insurance costs vary in New Mexico, as they do in any state. Your insurance will cost more if you live in a high crime area or an area in danger of wildfires. Insurers look for potential risks to determine how likely you are to file a claim. Insurance companies penalize some risk factors more than others, so comparing rates and policies is crucial.
There are many things to consider when you're looking for home insurance, including:
- Location of your home.
- Proximity to fire hydrants or a fire station.
- Age of your home (an older home is more prone to damage and deterioration).
- Construction type (wood buildings are more prone to fires than brick buildings).
- Amount of your deductible (a lower deductible equates to a higher monthly payment).
- Discounts available on your insurance premium (installing deadbolt locks prevents theft and handrails along stairways prevent injuries).
- Damage covered by the policy.
Keep in mind that private insurance plans typically don't cover flood damage. You should secure flood insurance if your home is in a flood zone because monsoon season can flood normally dry areas. Check FEMA’s website to see if your home is in a flood zone. If you’re in a flood zone, the National Flood Insurance Program is a federal program that allows homeowners to buy flood insurance.
New Mexico's FAIR Plan
Some people in New Mexico aren't able to get homeowner’s insurance from private insurance companies for a variety of reasons, including wildfire or landslide risk. The New Mexico Fair Access to Insurance Requirements (FAIR) act promises basic property insurance to New Mexico's homeowners. The FAIR Plan created an insurance underwriting association called the New Mexico Property Insurance Program (NMPIP). The purpose of the program is to provide basic property insurance to qualified individuals at an affordable price. However, the NMPIP home insurance plan has some limitations:
- No replacement value insurance available.
- Higher deductibles apply to those who have filed many claims.
- Owners must live in the home.
- No insurance coverage upgrades available.
Although most people can buy private homeowner's insurance, you might only qualify for the NMPIP plan. This is especially true if your home is at high risk for certain threats like wildfires. If you can't buy insurance from private insurers, check with the NMPIP to see if you qualify.
Frequently Asked Questions about New Mexico Home Insurance
1. What is replacement cost?
Replacement cost is the amount it takes to replace your items with new ones. Replacement cost home insurance plans are available for an additional fee.
2. Do New Mexico homeowner’s insurance plans cover monsoon damage?
Nearly all homeowner's insurance plans in New Mexico cover wind damage. You can also buy flood insurance through the National Flood Insurance Program. This is important if your home is in a flood zone, as the financial loss after a flood disaster is potentially catastrophic.
3. How does fire risk affect your insurance premiums?
If your home is in an area where wildfires occur frequently, you will pay more for insurance. However, you typically will pay less for insurance if your home is close to a fire department and at least one fire hydrant.
4. What can you do to improve your home safety and qualify for a discount?
If you live in an urban area, you're more likely to be a victim of theft or vandalism. You can often lower your insurance premium by installing a burglar alarm or fencing in your yard. Be sure to tell your insurer about any changes you make to take advantage of rate discounts.
5. What does additional living expense coverage pay for?
Additional living expense coverage pays for normal living costs when you cannot live in your home. For example, it will pay for a motel if you cannot stay at your home because of storm damage.
How to Get Great Rates on New Mexico Home Insurance
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New Mexico Home Insurance Resources
NM Insurance Fraud Bureau
Consumer protection and fraud prevention for residents of New Mexico