In New Mexico, as in every state, car insurance is sure to play a big part in any claim brought after a traffic accident. And New Mexico, like most states, requires vehicle owners to purchase minimum amounts of liability insurance coverage. Read on for the details of New Mexico's auto insurance rules, how coverage is likely to affect a car accident case, and the kinds of penalties you can expect if you drive without insurance in the state.
New Mexico follows a traditional "fault"-based system when it comes to financial responsibility for losses stemming from a car accident: injuries, lost income, vehicle damage, and so on. This means that the person who was at fault for causing the car accident is also responsible for any resulting harm (from a practical standpoint, the at-fault driver's insurance carrier will absorb these losses, up to policy limits).
In New Mexico, a person who suffers any kind of injury or damage due to an auto accident usually can proceed in one of three ways:
Note: In no-fault car insurance states, a claimant doesn't usually have this same range of options. After a car accident in a no-fault state, you must turn to the personal injury protection coverage of your own car insurance policy for payment of medical bills and other out-of-pocket losses, regardless of who caused the crash. Only if your injuries reach a certain threshold can you step outside of no-fault and make a claim directly against the at-fault driver. But New Mexico drivers don't need to worry about no-fault after an in-state accident.
New Mexico makes the purchase of liability car insurance coverage mandatory. The required minimum amounts of coverage in New Mexico are:
Liability coverage pays the medical bills, property damage bills, and other costs of drivers, passengers, and pedestrians who are injured or have their vehicle damaged in a car accident you cause, up to coverage limits. You can (and in some situations should) carry more coverage to protect you in case a serious crash results in significant car accident injuries and vehicle damage. Once policy limits are exhausted, you are personally on the financial hook, so higher insurance limits can help protect your personal assets in the event of a serious crash.
Your liability coverage will kick in if any family member is driving your vehicle, or if you've given someone else permission to use it. It will likely also cover you if you get into an accident in a rental car.
Remember that liability coverage doesn't apply to your own injuries or vehicle damage after a New Mexico car accident. You'll need different (additional) coverage for that if you're involved in a car accident and no one else's coverage applies to your losses. For example, collision coverage (optional in New Mexico) can pay for repairs to (or replacement of) your damaged vehicle after a car accident. Note that collision or comprehensive might be required under the terms of a vehicle lease or financing agreement.
Uninsured motorist (UM) coverage is not required in New Mexico, but UIM is almost always a smart policy add-on, since it protects you and your passengers if the at-fault driver has no insurance, or if you're injured in a hit and run accident. Keep in mind that UM coverage will not apply to vehicle damage.
According to the New Mexico Motor Vehicle Division, vehicles that do not have required liability insurance are subject to suspension of vehicle registration. Under the New Mexico Mandatory Financial Responsibility Act, the owner of an uninsured vehicle must turn in the vehicle's registration and license plates to the MVD within 10 days of receiving a Notice of Suspension of Registration letter. Failure to do so could result in criminal penalties.
That's on top of the financial hit you could take if you're in a car accident and you don't have car insurance.