Don’t get caught underinsured
In this comprehensive guide, we discuss New Mexico's car insurance requirements, shedding light on the fault-based insurance system, the minimum coverage every driver must have, and the repercussions of being uninsured.
Imagine you’re driving along the High Road to Taos Scenic Byway when out of nowhere, a drunk driver slams into your car, causing significant injuries. When you get out of your vehicle to exchange information, you quickly realize the at-fault driver is uninsured.
This situation is far more common than you might think. According to the Insurance Information Institute, almost 22 percent of drivers in New Mexico are uninsured, the fourth-highest percentage in the nation.
This article explains the minimum car insurance requirements in New Mexico, the penalties for being uninsured, and the steps to take following an accident with an uninsured driver.
New Mexico’s fault-based insurance system
New Mexico has a fault-based insurance system, meaning the party who is legally at fault for the accident is responsible for paying the damages that result. This is different from a no-fault insurance system, in which each driver receives compensation from their own insurer.
In New Mexico’s fault-based insurance system, drivers have three options to recover damages from an at-fault driver:
- File a claim with their own insurance company (their insurer will seek reimbursement from the at-fault driver’s insurance company),
- File a claim with the at-fault driver’s insurance company, or
- File a personal injury lawsuit against the at-fault driver.
The route you choose depends largely on the extent of your damages and your comfort level with each option. For example, many drivers prefer to deal with their own insurance company, believing that interactions with the at-fault driver’s insurer will be contentious.
What are the minimum car insurance requirements in New Mexico?
Under New Mexico Statute Section 66-5-205, all drivers in the state are required to carry the following minimum liability insurance:
- $25,000 for bodily injury to or death of one person,
- $50,000 for bodily injury to or death of two or more persons, and
- $10,000 for property damage in any one accident.
These minimum requirements cover the costs of injuries and damages to others in accidents that you cause (up to the policy limits). However, they do not cover your own injuries or your vehicle damages.
Learn more about auto liability insurance, including what is and is not covered.
Optional insurance coverage in New Mexico
Given the limitations of New Mexico’s minimum insurance requirements, motorists often consider purchasing additional coverage. These can include:
- Comprehensive coverage provides coverage for losses other than those caused by a collision (vandalism, falling branches, fire, etc.).
- Collision coverage provides coverage for damage to your vehicle caused by an accident with another vehicle or an object (such as a fence).
- MedPay provides coverage for medical expenses incurred by you and your passengers regardless of who is at fault. Med-Pay limits apply per person and typically range from $1,000 to $10,000.
- Personal injury protection (PIP) provides the same coverage as Med-Pay, but also includes coverage for lost wages and various transportation expenses.
- Uninsured motorist (UM) coverage provides coverage for bodily injury and property damage sustained by you or your passengers as a result of an accident involving an uninsured driver.
- Underinsured motorist (UIM) coverage provides coverage for bodily injury and property damage sustained by you or your passengers as a result of an accident involving a driver who has insufficient insurance to cover the damages.
In addition to the optional coverages above, drivers in New Mexico are permitted to purchase additional liability insurance. Remember, if you cause an accident that exceeds your liability policy limits, you’ll be personally liable for those damages.
What are the penalties for being uninsured in New Mexico?
In New Mexico, driving without insurance can lead to fines, license suspension, and even jail time. However, the most severe consequence is the prospect of being personally liable for damages in an accident that you cause.
The financial impact could be devastating, especially in the event of an accident involving severe injuries or death.
Legal options following an accident with an uninsured driver
If you have UM coverage, filing a claim with your insurer is the easiest way to recover damages following an accident with an uninsured driver.
If you don’t have UM coverage (or any other coverage that will provide compensation in the event of an accident with an uninsured driver), you’ll have to file a personal injury lawsuit against the uninsured driver.
Unfortunately, drivers who don’t carry insurance often don’t have the money to satisfy a judgment against them.
Learn more about civil judgments, including how to enforce a judgment when an at-fault driver doesn’t appear to have any money or assets.
What if my friend borrows my car?
In New Mexico, as is the case in most states, car insurance typically follows the car, not the driver. This means if a friend or family member borrows your car and causes an accident, your insurance will typically be responsible for any damages. However, the specifics can depend on your policy's terms, so it's best to review your policy or consult with an insurance professional.
FAQs about car insurance in New Mexico
New residents have 30 days to register their vehicle and obtain New Mexico insurance.
Typically, your personal car insurance extends to rental cars. However, it's a good idea to verify this with your insurance company before taking a trip.
New Mexico is a total loss state. If the cost of repairing your vehicle exceeds its actual cash value, your insurer might declare it a total loss.
Yes, you can exclude specific drivers from your policy. However, excluded drivers will have no coverage under your policy if they operate your vehicle.
While not mandatory, gap insurance can be beneficial if you have an auto loan or lease. It covers the “gap” between the vehicle's current worth and the remaining loan/lease amount if your car is totaled or stolen.
Understanding New Mexico's car insurance requirements is critical if you plan to navigate New Mexico’s roads. Fortunately, after reading this article, you’re well on your way!