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New Mexico Car Insurance Laws & State Minimum Coverage Limits

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Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best...

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UPDATED: Feb 22, 2018

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New Mexico State Flag New Mexico law requires that all drivers carry a minimum amount of car insurance in order to drive legally in the state. Liability insurance is required to protect all drivers on the road from the high costs associated with accidents – whether at fault or not at fault in the accident.

Mandatory Insurance Coverage

The financial responsibility law in New Mexico requires every driver to carry a liability insurance policy. The policy must meet the following legal minimums:

  • At least $25,000 in bodily injury coverage per person
  • At least $50,000 in bodily injury coverage per incident, to cover multiple people injured
  • At least $10,000 in property damage coverage to pay for damage to another person’s vehicle or any other property damaged in an accident

While these are the legal minimums, they are not always enough to pay for the damages in an accident, particularly a serious one with many injuries. As a result, most drivers choose to carry liability insurance above the legal minimum.

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Optional Insurance Coverage

There are many options that New Mexico drivers are not required to carry, but can choose to add to an auto policy in order to provide more protection. In addition to increasing the liability limits, drivers can also select from a list of coverage choices:

  • Collision – covers damages to your vehicle in the event that you are involved in an accident where you are found to be at fault. Without this coverage, there is no benefit for damages to your own vehicle in an at-fault accident.
  • Comprehensive – coverage that provides for damages to your vehicle that are caused by non-collision sources. This can include theft, vandalism, weather-related damage, and fire.
  • Uninsured/Underinsured Motorist – covers damages that are caused by an uninsured motorist, or that exceed the limits of the other driver’s policy when they are at fault.
  • Towing and Labor – coverage for roadside assistance and towing in a non-collision incident, such as a roadside breakdown.
  • Rental Reimbursement – coverage for a rental car while your car is being repaired under a covered loss.

New Mexico insurance companies may offer a wide range of different add-ons and options that you can select to add to your policy for added value and protection.

Proof of Insurance and Driving Uninsured Penalties

New Mexico uses an electronic reporting system to ensure that all drivers have the required coverage. Insurance companies report policy information electronically and will also report any cancellation or lapse in coverage.

If your policy is cancelled, you will receive a notification requesting that you provide proof of a new policy within 30 days, or your vehicle registration will be suspended. You will then have ten days to turn in your plates. Failure to turn in your plates when the registration has been suspended will result in a $1000 fine and up to 6 months in jail.

Drivers are also required to present proof of insurance when registering a vehicle, at traffic stops, and at the scene of an accident on request. Failure to do so may result in penalties. If you are caught driving uninsured in New Mexico, you may be fined up to $300 and face up to 90 days in jail. Your registration will be immediately suspended.

Shopping for Car Insurance in New Mexico

New Mexico ranks at number 33 among all 50 states for the average annual cost of car insurance, placing the state just over $100 below the national average with a rate of $1201, according to a 2017 Insure.com study.

Drivers can shop around in order to find the best deal on insurance. The New Mexico Office of the Superintendent of Insurance offers a premium comparison guide to assist drivers with choosing the right policy to meet their needs and budget. They also keep records of complaints against insurance companies to help the consumer buy from reputable insurers.

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Insurance for High-Risk Drivers

Drivers who have tickets, accidents, or serious violations on their records may be considered high-risk. This means that insurance companies see them as more likely to get in an accident and will charge higher premiums as a result.

In some cases, a high-risk driver may have difficulty obtaining insurance on the open market. Drivers who have been turned down for insurance by at least 3 companies can apply through the New Mexico assigned risk auto plan, which will assign the driver to an insurance company. These policies will come with higher rates than a standard policy and are considered a last resort to obtain the needed coverage to meet financial responsibility requirements.

Teen Drivers in New Mexico

New Mexico uses a three-stage Graduated Driver Licensing (GDL) program. Under this program, teen drivers must pass through all of the stages, meeting all requirements and following all restrictions along the way. Any of the three stages may be extended by 30 days for teens that have certain violations on their record.

Instructional Permit

The first step in the process, this permit allows teens to begin learning how to drive and practicing with supervision. In order to get this permit, the teen must:

During this stage, the teen driver may drive only when accompanied by a supervising driver who is 21 or older and has been licensed for at least three years.

Provisional License

Teens can apply for a provisional license at the age of 16, as long as they have met the following requirements:

  • Hold a instructional permit for at least 6 months
  • Complete and pass an approved driver education course, including a 3-hour DWI section
  • Complete 50 hours of driving practice with at least 10 of those hours being at night
  • Have a clean record for at least 90 days prior to application
  • Pass a road test

With the provisional license, teens can drive unsupervised as long as they adhere to the following restrictions:

  • No more than one passenger under the age of 18 unless they are family members or a driver over 21 in the passenger seat
  • Driving is not permitted between midnight and 5 a.m. unless accompanied by a driver over 21 or on approved school, religious, or employment activities

Full License

Teens can graduate to a full, unrestricted license after 12 months with a provisional license, as long as they have had a clean record for 90 days and do not have any pending traffic convictions or drug/alcohol-related charges. All teen drivers are required to carry insurance that meets the financial responsibility law. Most teens are insured on the policy of a parent or guardian. This arrangement can continue (in most cases) even while the teen is away at school, until they have established a permanent resident of their own and obtain their own insurance policy.

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About Eric Stauffer

Author: Eric StaufferI am a former insurance agent and banker turned consumer advocate. My priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

6 Comments

  1. Insurance sales is based on fear. Life, health, auto… purchase state minimums for auto, cancel all health insurance. And life insurance, purchase like your going to die tomorrow but save your money like your going to live forever but not in insurance.

    Reply
  2. Is it a state law in New Mexico that insurance company can keep 25,000 as a set off?

    Reply
  3. So a teen driver in NM does not need to be added to their parents’ insurance until they receive their full license. Is this correct?

    Reply
    • Hi Cassandra,

      Check with your insurance agent on that. Even if the state allows it, each company may have their own guidelines. You do not want to have a teen driver behind the wheel without a definitive answer from your insurance company.

      Best,
      Eric Stauffer

      Reply
  4. I am afraid of insurance companies making me pay more than I need to for my teen to drive my car. If I own the car does he have to be under my insurance in order to drive it?

    Reply
    • Hi Judy,

      In nearly every situation, your teen driver will need to be on your insurance policy in order to drive your car. Be ready, teen drivers are statistically some of the most expensive to insure, so you will probably see a rate increase.

      Best,
      Eric Stauffer

      Reply

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