UPDATED: MAY 24, 2022 | 2 MIN READ
Home insurance is a critical purchase, as well as one of the most costly ones a person will make in their lifetime. Chances are, sometime in your life your home will be damaged – whether from flood, hail, or even some hooligan breaking your windows. Home insurance steps in to help you pay to repair your home, and it’s important that you find the best plan possible for your unique needs. One of the best ways to do that is to familiarize yourself with information common to your state – how much average premiums cost, what you can expect to be covered, what risks befall properties in your area and more.
- Fun fact: Smokey the Bear, who educates people on how to prevent forest fires, lives in New Mexico!
Average Rates in New Mexico
Annual premiums in New Mexico average at $1,017 annually, according to the Insurance Information Institute. This makes New Mexico somewhat on the cheaper end, with premiums cheaper than 62% of states in the nation, and almost two hundred below the national average of $1,211. The states with premium prices closest to New Mexico include California (average premiums $1,008) and Maryland (average premiums $1,037).
Renter’s insurance in New Mexico is somewhat more expensive. Though New Mexico was ranked the 15th most expensive state for renter’s insurance, it is still only $7 above the national average of $180. Similar prices for renter’s insurance can be found in Hawaii ($185 average premiums) and California ($182 average premiums).
New Mexico Legal Insurance Requirements
While state law doesn’t require you to purchase home insurance, it will likely be a condition of your purchasing a mortgage or loan for your home. If you can’t choose a home insurance plan yourself, you can be involuntarily placed on a home insurance plain by your mortgage lender, which is often more expensive than choosing yourself. The good news is, New Mexico has a range of coverage plans available on the market, as well as a FAIR plan for homes that can’t meet eligibility requirements for standard market home insurance.
As in most states, standard insurance in New Mexico covers the following:
- Dwelling: This insurance is for damage to the physical structure of your home, as well as other man-made structures attached to your home on the property (like garages, plumbing systems, and electrical wiring)
- Other structures: This is for man-made structures on your property not immediately attached to your home – like unattached garages, carriage homes, fencing, and tool sheds.
- Personal Property: Home insurance will usually cover certain items within the home that are needed in everyday life, including clothing, furniture, and things like kitchen appliances. To get coverage for items like antiques or jewelry, you may need to purchase additional insurance or endorsements.
- Loss of Use: This insurance comes into play when damage to your home or ordered evacuations force you to reside outside of your home for a time. This insurance will help you maintain your normal standard of living – for example, it can help cover extra expenses incurred by motel stays or apartment rentals during this time.
- Personal Liability: Should you be held legally responsible for someone’s injury or property damage due to negligence, this insurance will help you pay for the legal fees that come with a lawsuit or claim.
- Medical payments: Even in cases where you aren’t held responsible, should someone besides yourself or a family member be injured on your property there’s a set amount your insurance can help you pay for their medical bills.
These kinds of coverage can be found in several “forms” in New Mexico. The main differences between these forms lie in the scope of “perils” or damaging events that can be insured against. This can range from very basic insurance covering named perils like fire, hail, windstorm, and vandalism, to comprehensive coverage that will insure against every peril there is not a listed exception for (like flood insurance).
The most basic kind of home insurance is offered under New Mexico’s FAIR plan, and is available to homes that may not be able to meet the requirements for standard market forms. This coverage only protects a home from fire, extended coverage, vandalism and malicious mischief. Home values for this insurance are based on actual cash value, and the home must be inspected and cleared of any “hazardous conditions” before it will be insured. These hazardous conditions include:
- Heating systems in poor or non-working condition, leaks in fuel supply, and dangerous venting systems
- Loose, exposed, or damaged wiring, as well as overloaded circuits
- House in need of substantial repair (including damaged flooring and broken windows)
- Excessive litter or detritus, especially if flammable
- Vacancy, or lack of human habitation
Common Risk Factors in New Mexico
Property damage is commonly caused either by wildfires or severe weather events in New Mexico – tornadoes, hail, and tropical storms chief among them. Wildfires are most dangerous in drought season, and according to the Insurance Information Institute, 79,887 acres of land were burned by wildfires in New Mexico in 2019 alone.
Properties in the eastern portion of New Mexico run the highest risk of being damaged by tornadoes – 75% of tornados of New Mexico land here, mainly between the months of April and July. Eastern New Mexico also sees frequent hailstorms, with hail larger than golf balls falling between 6 to 8 times a year. Hail of this size can cause catastrophic damage, as shown by the Socorro hail storm of 2004, which resulted in almost 40 million dollars in damage. The central and western portions of the state may not experience the same frequency of hailstorms as eastern New Mexico, yet still suffer from damaging hail storms a few times every year. In 2015 hail storm-related damage accounted for over half of all home insurance claims filed in New Mexico.
Fortunately, damage from fire and hail are covered by most standard homeowners market insurance plans in New Mexico, as well as by New Mexico’s FAIR plan. However, an often-underestimated risk to New Mexico properties comes from flooding from tropical storms. Flood insurance is NOT covered by either FAIR plans or by standard home insurance – rather, it must be purchased from the National Flood Insurance Program, if you live in a participating community.
Insurance Demographics/Statistics in New Mexico
A number of things can affect the value of your home insurance. Likely the most influential among these is your home’s value (which can set your policy price), but information ranging from the crime rates in your locale to your personal characteristics can also have an impact on the final price.
Your Home’s Value
Insurance companies take a proportion of your home’s value to set the “face” amount of your policy. Home value is measured in two ways – the most common of these, replacement cost, determines how much money is needed to rebuild your home from scratch, using similar materials and with current labor costs. Another way of assessing home value, especially with older homes is with actual cash value. This means finding the amount of money it would take to replace your home after depreciation from damage or wear and tear is considered.
Average home values in New Mexico fall slightly below the national average of $248,857 – at $210,141. When you’re finding your home’s value, be sure not to mistake it for the sale price of the home. Included in home sale prices is the value of the land a building resides on, which insurance companies concerned only with the cost of replacing the physical structures of your home don’t factor into their calculations for home value.
Local Crime Rates
You may have to pay higher insurance premiums if your home is located in a place with high rates of property crime. After all, higher rates of property crime could correlate with a higher likelihood of you needing to make an insurance claim! Unfortunately, property crime rates in New Mexico are high – meaning you may need to pay higher insurance premiums. After taking out property crimes related to auto theft, the FBI Uniform Crime Reporting Program found a 2.93% rate of property crime in 2018 – much higher than the 1.97% national rate.
Your Income and Education
In many cases, having good credit is beneficial when you’re purchasing insurance – most (but not all) insurance companies give favorable rates to customers with good credit. High incomes and a college degree are associated with good credit scores, and may be considered. In New Mexico, the Census Bureau found the average household income to be $47,169 – much lower than the national average of $64,179. New Mexico lags slightly in education, with 27.1% of people above 25 having a bachelors’ degree or higher, compared with 32.06% nationally.
Where To Purchase Home Insurance in New Mexico
Now that you’ve learned some general information about home insurance in New Mexico, you can start examining the specifics. What insurance company will give YOU the best rates? Agilerates.com can help you compare the policies of a host of different insurance companies, giving you accurate quotes that will help you find an insurance plain tailored to your needs. It’s not a bad idea to search even if you already have homeowners insurance. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use Agilerates.com online form to get matched with a local agent, get free quotes, and shop around!