New Mexico Auto Insurance Requirements

New Mexico Mandatory Minimum Coverage

Financial Responsibility Law

New Mexico Motor Vehicle Code requires all drivers to carry minimum liability insurance or alternative proof of financial responsibility.

Required Minimum Limits: 25/50/10

What 25/50/10 Means

$25,000 Bodily Injury Per Person:

• Maximum paid for injuries to ONE person in an accident
• Applies to liability YOU cause to OTHERS (not your own injuries)
• Medical bills, lost wages, pain and suffering for injured party

$50,000 Bodily Injury Per Accident:

• Maximum paid for ALL injuries to ALL persons in ONE accident
• If multiple people injured, this is the total available
• Example: If 3 people injured at $25,000 each ($75,000 total), policy only pays $50,000 maximum

$10,000 Property Damage Per Accident:

• Maximum paid for damage to OTHER PEOPLE'S property
• Includes vehicles, buildings, fences, mailboxes, etc.
• Single limit per accident regardless of number of vehicles/objects damaged

Critical Point: New Mexico minimums are LOW. A serious accident easily exceeds these limits, exposing drivers to personal liability for amounts above policy limits.

Example of 25/50/10 Limits

Accident Scenario:

• You cause accident injuring 3 people in another vehicle
• Person 1: $30,000 medical bills
• Person 2: $25,000 medical bills
• Person 3: $20,000 medical bills
• Total injury claims: $75,000
• Vehicle damage: $15,000

Your 25/50/10 Policy Pays:

• Person 1: $25,000 (limited by per-person limit)
• Person 2: $25,000 (limited by per-person limit)
• Person 3: $0 (already paid $50,000, per-accident limit exhausted)
• Vehicle: $10,000 (limited by property damage limit)
• Total Paid: $60,000

You Owe Out-of-Pocket:

• Person 1: $5,000
• Person 3: $20,000
• Vehicle: $5,000
• Total Personal Liability: $30,000

Producer Responsibility: Explain to clients that minimum limits are RARELY adequate. Recommend at least 100/300/100 or higher, plus umbrella policy.

Proof of Insurance Requirements

Required Documentation

New Mexico drivers must carry:

• Insurance identification card issued by insurer
• Shows: policy number, effective dates, coverages, VIN
• Must be presented upon request to:
  • Law enforcement officers
  • Motor Vehicle Division
  • After accident to other driver

Digital Proof Accepted:

• New Mexico allows electronic insurance cards on smartphones
• Must be readily accessible
• Same legal validity as paper card

Verification System

New Mexico Motor Vehicle Division (MVD):

• Operates insurance verification system
• Insurers report policy information electronically
• MVD can verify coverage in real-time
• Identifies uninsured vehicles for enforcement

Penalties for Driving Without Insurance

First Offense:

• Fine up to $300
• Possible license suspension
• Vehicle impoundment possible
• SR-22 filing may be required

Subsequent Offenses:

• Higher fines (up to $1,000)
• Longer license suspension periods
• Mandatory SR-22 filing
• Potential criminal charges

Alternative Methods of Compliance

Instead of purchasing auto insurance, New Mexico allows:

Surety Bond Option

Requirements:

• Post $60,000 surety bond with NM State Treasurer
• Bond covers liability for damages caused by driver
• Remains in effect until released by State Treasurer
• Must meet state bond requirements

Best For: High-net-worth individuals who prefer self-insurance approach

Cash Deposit Option

Requirements:

• Deposit $60,000 cash with NM State Treasurer
• Held as security for potential liability claims
• Earns interest while on deposit
• Can be released if insurance subsequently obtained

Best For: Individuals with sufficient liquid assets preferring cash security

Self-Insurance (Fleets)

Requirements:

• Available to vehicle fleets (typically 25+ vehicles)
• Demonstrate financial capacity to pay claims
• Obtain certificate of self-insurance from MVD
• Maintain reserves for claims

Best For: Large companies, government entities, municipalities

Exam Tip: Know that New Mexico allows $60,000 bond or cash deposit as alternative to insurance, but this is rare—99%+ of drivers use standard insurance.

Uninsured/Underinsured Motorist Coverage

Mandatory UM/UIM Coverage

New Mexico REQUIRES Uninsured and Underinsured Motorist coverage unless:

• Rejected in writing by insured
• Insured signs rejection form
• Rejection valid for policy term

Default UM/UIM Limits:

• Must be offered at same limits as bodily injury liability coverage
• Example: If you buy 100/300 liability, UM/UIM must be offered at 100/300
• Insured can select lower limits if they choose

Uninsured Motorist (UM) Coverage

UM Covers You When:

• Hit by driver with no insurance
• Hit-and-run accident (driver not identified)
• Hit by driver whose insurer denies coverage or becomes insolvent

UM Pays For:

• Your bodily injuries
• Your passengers' bodily injuries
• Lost wages
• Pain and suffering
• Medical expenses

UM Does NOT Cover:

• Vehicle damage (that's UMPD—separate coverage)
• Property other than vehicle

Underinsured Motorist (UIM) Coverage

UIM Covers You When:

• At-fault driver has insurance but insufficient limits
• Their liability limits are exhausted
• Your damages exceed their policy limits

UIM Example:

• You have 100/300 UIM coverage
• At-fault driver has 25/50 liability (state minimums)
• Your injuries total $75,000
• At-fault driver's insurer pays $25,000 (their limit)
• Your UIM pays $50,000 (difference up to your limit)
• Total recovery: $75,000

UM/UIM Rejection

To Reject UM/UIM Coverage:

• Insured must sign written rejection form
• Form provided by insurer at application
• Rejection valid for policy term
• Can add coverage at renewal

Why Reject? (generally NOT recommended):

• Reduce premium (modest savings)
• Some prefer to rely on health insurance for injuries

Why Keep UM/UIM? (strongly recommended):

• Protects against uninsured drivers (significant population in NM)
• Covers hit-and-run accidents
• Health insurance may not cover all damages (lost wages, pain/suffering)
• Relatively inexpensive coverage

Producer Best Practice: STRONGLY recommend clients maintain UM/UIM coverage at the same limits as their liability coverage. New Mexico has a significant uninsured motorist population.

New Mexico Personal Auto Policy (PAP)

Standard ISO PAP Coverage Parts

Part A: Liability Coverage

Covers:

• Bodily injury and property damage you legally owe to others
• Defense costs (attorney fees, court costs)
• Supplementary payments (bail bonds, loss of earnings for court appearances)

Covered Autos:

• Named vehicles on declarations page
• Newly acquired vehicles (automatic coverage for 14-30 days)
• Replacement vehicles
• Temporary substitute vehicles

Covered Persons:

• Named insured
• Spouse (if resident of household)
• Family members (residents of household)
• Anyone using covered auto with permission

Exclusions:

• Intentional damage
• Property damage to property you own or transport
• Vehicle used as livery (Uber/Lyft without proper coverage)
• Commercial use without proper coverage
• Racing or competitive events

Part B: Medical Payments Coverage

Purpose: No-fault coverage for medical expenses

Covers:

• Medical, dental, surgical, ambulance expenses
• For you and passengers
• Regardless of who caused accident
• Typically $1,000, $2,000, $5,000, or $10,000 per person

Pays Within: 3 years from date of accident

Coordination with Health Insurance:

• Med Pay is primary (pays first)
• Health insurance covers excess
• No deductible under Med Pay

Part C: Uninsured Motorists (UM/UIM)

Covered in detail above - Mandatory in NM unless rejected

Part D: Damage to Your Auto (Physical Damage)

Two Coverage Types:

Collision Coverage:

• Damage from collision with another vehicle or object
• Single-car accidents (hit tree, rollover, etc.)
• At-fault accidents where your vehicle damaged
• Subject to deductible (typically $250, $500, $1,000, or $2,000)

Comprehensive Coverage (Other Than Collision):

• Theft or larceny
• Fire, lightning, flood
• Vandalism or malicious mischief
• Glass breakage (windshield)
• Hail, wind, or storm damage
• Collision with animals (deer, elk common in NM)
• Falling objects
• Subject to deductible (often $0 for glass, typically $100-$1,000 for other)

New Mexico Consideration: Comprehensive coverage important due to wildlife collisions (deer, elk), hail storms, and vehicle theft rates in urban areas.

SR-22 Certificate of Insurance

What is SR-22?

SR-22 is a certificate of financial responsibility filed by insurer with NM Motor Vehicle Division proving:

• Driver maintains continuous liability insurance
• Policy meets or exceeds state minimums (25/50/10)
• Insurer will notify MVD if policy cancelled or lapses

SR-22 is NOT insurance—it's proof of insurance.

Who Needs SR-22?

MVD requires SR-22 for:

• DWI/DUI convictions
• Driving without insurance violations
• Excessive traffic violations (point accumulation)
• At-fault accidents without insurance
• License reinstatement after suspension/revocation
• Out-of-state violations (some situations)

SR-22 Requirements

Duration: Typically 3 years from date of offense (varies by violation)

Maintenance:

• Must maintain continuous coverage throughout SR-22 period
• No lapses or cancellations allowed
• If policy cancels, insurer notifies MVD → license suspended immediately

Cost: $25-$50 filing fee (one-time or annual depending on insurer)

SR-22 Insurance Shopping

Challenges:

• Not all insurers offer SR-22 filings
• Higher premiums due to high-risk classification
• Limited coverage options
• May require non-standard insurer

Specialty SR-22 Markets:

• Non-standard auto insurers specialize in high-risk drivers
• Higher premiums but provide required coverage
• Often minimum state limits only

Producer Note: Clients with SR-22 requirements need specialized placement. Know which carriers in New Mexico accept SR-22 risks.

Auto Insurance Rating Factors

Factors Affecting New Mexico Auto Premiums

New Mexico Territory Rating

Territories based on:

• ZIP code
• Population density
• Claim frequency and severity
• Vehicle theft rates
• Accident rates

Urban vs. Rural:

• Albuquerque - Highest rates due to theft and accident frequency
• Rural areas - Generally lower rates but longer emergency response

Discounts Available

Common New Mexico Auto Discounts:

• Multi-policy (bundling home and auto)
• Multi-vehicle (multiple cars on same policy)
• Good driver (no accidents/violations 3-5 years)
• Good student (typically 3.0 GPA or higher, under age 25)
• Defensive driving course
• Anti-theft devices
• Safety features (airbags, ABS, electronic stability control)
• Low mileage (under 7,500 or 10,000 miles/year)
• Automatic payment/paperless

Marketing Opportunity: Help New Mexico clients maximize discounts—many don't realize they qualify for good student, low mileage, or safety feature discounts.

New Mexico-Specific Auto Considerations

Wildlife Collisions

Common in New Mexico:

• Deer and elk crossing highways
• Higher frequency in rural mountain areas
• Most common at dawn and dusk
• Peak season: Fall (mating season) and spring

Coverage: Comprehensive (Other Than Collision)

Claims Frequency: New Mexico ranks in top states for animal collision claims

High Altitude and Weather

Mountain Driving Challenges:

• Snow and ice in winter months (northern NM)
• Steep grades and winding roads
• Increased brake wear
• Higher accident rates in mountain areas

Monsoon Season (July-September):

• Flash flooding on roads
• Reduced visibility
• Hydroplaning risk
• Comprehensive covers flood damage to vehicles

Uninsured Motorist Population

New Mexico Challenge:

• Higher-than-average uninsured motorist rate
• Estimates: 15-20% of drivers uninsured
• Makes UM/UIM coverage critical
• Enforcement challenges in rural areas

Producer Emphasis: Due to high uninsured motorist rates in New Mexico, ALWAYS recommend full UM/UIM coverage at the same limits as liability coverage.

Commercial Auto Insurance

Business Auto Policy (BAP)

Coverage for Commercial Vehicles:

• Company-owned vehicles
• Employee-owned vehicles used for business
• Hired autos (rentals for business use)
• Non-owned autos (employee cars used for business errands)

Covered Autos Designation

Hired and Non-Owned Auto Liability

Critical for New Mexico Businesses:

• Employees using personal vehicles for business errands
• Rental vehicles for business travel
• Protects business from vicarious liability

When Needed:

• Employees use own cars for deliveries, sales calls, errands
• Business rents vehicles occasionally
• Company doesn't own vehicles but employees drive for work

Producer Tip: Many New Mexico small businesses don't realize they need hired and non-owned auto coverage when employees use personal vehicles for business purposes.