New Mexico Car Insurance Requirements

Learn about New Mexico’s fault-based insurance system, how much auto insurance you’re required to have, how to get compensation after an accident, and much more.

By , J.D. · University of San Francisco School of Law
Updated by Dan Ray, Attorney · University of Missouri–Kansas City School of Law

If you own or drive a car in New Mexico, you're subject to the state's auto insurance requirements. New Mexico's Mandatory Financial Responsibility Act (MFRA) tells you what insurance you must have. You should also know what coverages you do have—as well as the coverages you should have—before you're in a car accident.

After a quick overview of New Mexico's fault-based insurance system, we'll turn our attention to the state's mandatory auto insurance law. What coverages does New Mexico law require? Are those coverages enough? Should you buy other insurance, in addition to what the state requires? How do you get compensation if you're hurt in a wreck?

We'll tell you what you need to know.

New Mexico Is a Fault-Based Insurance State

New Mexico is a traditional fault-based insurance state. Under a fault-based system, a driver who injures others in a car wreck must pay compensation (what lawyers and judges call "damages") to those who've been harmed.

To make sure that drivers can pay for at least some of the damages they might cause, the MFRA requires nearly all owners and drivers to maintain "proof of financial responsibility." (N.M. Stat. § 66-5-205 (2024).) While there are other ways to meet this requirement, most will do so by buying an auto insurance policy with the coverages required by law. (N.M. Stat. § 66-5-218 (2024).)

In a fault-based state like New Mexico, if you're injured in a collision that was another driver's fault, you can bring an insurance claim or file a lawsuit against them to recover your damages. To win, you must prove that the other driver was negligent—didn't drive as carefully as they should have under the circumstances—and that their negligence caused you to suffer an injury or property damage.

Auto Insurance Requirements in New Mexico

To satisfy New Mexico law, an auto insurance policy must, at a minimum, provide liability insurance coverages in these amounts:

  • $25,000 for bodily injury to, or the death of one, person in one accident
  • $50,000 for bodily injury to, or the deaths of, two or more people in one accident, and
  • $10,000 for damage to the property of others in one accident.

(N.M. Stat. § 66-5-208 (2024).)

In insurance and legal circles, this is sometimes called "25/50/10 liability coverage."

What Does My Liability Insurance Pay For?

If you're at fault for a car accident, your liability insurance will compensate (in the language of the law, it will "pay damages to") others who are injured or whose property you damage, up to your coverage limits. For example, if you injure another driver, or a passenger or pedestrian, your liability insurance will pay them for their injuries.

Here are some of the damages an auto liability policy will cover:

  • doctor, hospital, and other medical bills related to your injuries and treatment
  • lost wages and benefits for time you're off work recovering
  • amounts you pay for replacement household and child care services
  • other out-of-pocket expenses resulting from your injuries
  • pain and suffering
  • emotional distress
  • disability and disfigurement, and
  • costs to repair or replace damaged property.

Note, importantly, that liability insurance only pays for losses you cause to others. It won't cover your personal injuries or pay to repair or replace your damaged property. If you want insurance to take care of your losses after a collision that's your fault (and you do), you'll need to buy it in addition to your liability coverage.

What Drivers and Vehicles Does My Liability Insurance Cover?

Your auto liability insurance covers—meaning it will pay for personal injuries or property damages caused by—you, together with all others who are named insureds under the policy. It probably also covers your spouse and other relatives living with you. When you give someone permission to drive your car (a "permissive user"), that driver is covered, too.

The motor vehicle listed in your policy is covered in the event of an accident. New Mexico law also requires that your liability policy must cover a vehicle you don't own, but that you're using with the owner's permission. (N.M. Stat. § 66-5-205.3.B (2024).) Examples include rental cars, a temporary loaner you get while yours is in the shop, or an auto you borrow from a friend.

Finally, if you buy a replacement car, your policy will cover it for a brief time. Let your insurance agent know that you bought or leased a new car as quickly as possible.

How Can I Tell What Auto Insurance I Have?

When you buy auto insurance, your agent should send you a complete copy of your policy. The cover page, or one of the first pages after the cover page, will be a copy of the policy's "declarations sheet," sometimes called a "dec sheet." The dec sheet will list all the insurance coverages your policy provides, and will tell you the policy limit for each kind of coverage.

If you can't find your policy or the dec sheet, your insurance agent can tell you what coverages and limits you have, and can send you a copy.

Do I Need More Liability Insurance? Or Different Kinds of Insurance?

The time to make sure you've got the kinds of auto insurance protection you need, and in the amounts best suited for your circumstances, is before you get in an accident. If you need help, your insurance agent can walk you through an analysis to see where you might have coverage gaps.

Is the Liability Coverage New Mexico Requires Enough?

The answer depends on the severity of the personal injuries and property damages you cause. When the losses are minor, New Mexico's mandatory insurance minimums should take care of you. But if you're responsible for an accident that causes moderate or severe injuries or extensive property damages, you'll burn through 25/50/10 coverage limits very quickly.

You're on the hook for all damages caused by a collision that's your fault, whether or not you have enough liability insurance. Having the right policy limits can be all that stands between you and financial disaster. If you can afford more liability coverage, it might prove to be a wise investment.

What Other Coverages Might I Need?

New Mexico law requires only that you have the minimum liability insurance. But there are several other coverages you should consider, if you can afford them. Here are a few.

Uninsured and underinsured motorist insurance. What happens if you're hurt in a wreck caused by a driver with no auto liability insurance, or whose coverage limits aren't enough to pay for all your damages? Your own liability insurance won't take care of you—it only pays for damages you cause to others. You'll need uninsured motorist (UM) or underinsured motorist (UIM) insurance to cover your uninsured losses.

UM and UIM coverages pay for the kinds of personal injury damages the other driver's liability insurance was meant to cover (discussed above). But they usually don't pay for property damages. To get your damaged car repaired or replaced, you'll need to have collision insurance.

New Mexico law requires every auto insurance policy to include both UM and UIM coverages. (N.M. Stat. § 66-5-301 (2024).) But the named insured under the policy is allowed to reject this coverage, so it isn't really mandatory. If you have this coverage, it's a good idea to keep it.

Collision insurance. Collision insurance pays to repair or replace your vehicle after an accident, regardless of who was at fault. If your car is a total loss, collision insurance usually pays its actual cash value, less your deductible, up to your coverage limit.

If you finance a new car with a loan or a lease, the lender will almost certainly require that you have collision insurance. Think about what you'll do if your car gets totaled but your collision insurance isn't enough to pay off the loan or lease. To cover the difference, consider buying gap insurance.

Comprehensive insurance. Comprehensive insurance works much the same as collision insurance. But it's meant to cover you for damages not caused by a collision with another car. For example, if your garage catches fire and your car is totaled, collision coverage will pay for your loss. If you're at the grocery store and your car gets damaged by a hail storm, you'll turn to your comprehensive insurance to pay for repairs or a replacement.

As with collision coverage, your comprehensive insurance will pay the actual cash value of your vehicle, less your deductible, in the event of a total loss. Here too, give some thought to gap insurance if you owe more for the vehicle than what it's worth. A new car lender likely will insist that you have comprehensive insurance.

Medical payments insurance. Also known as MedPay, this insurance pays your medical bills, and those of your passengers, up to the per person coverage limit. That limit is usually a few thousand dollars, but you can probably buy more coverage if you want it. MedPay pays even if you were to blame for the accident.

How Do I Get Compensation After an Accident?

The answer depends, at least in part, on the circumstances of the accident. If you were at fault, or if the at-fault driver was uninsured, you'll probably have to file a claim—called a first-party claim—against your own insurance policy.

But when another insured driver causes your injuries and losses, you'll file an insurance claim—called a third-party claim—against them.

Filing a First-Party Insurance Claim

In some situations, a first-party insurance claim will be your only option. If you're hit by an uninsured driver who doesn't have any other assets you can collect for payment, a claim for UM benefits under your auto policy will be the only way to collect personal injury damages.

That will also be true for your property damage. When the at-fault driver has no liability insurance, or when you're to blame for an accident, you'll have to bring a claim under your collision insurance to get your vehicle repaired or replaced.

Filing a Third-Party Insurance Claim

When the at-fault driver is insured, you'll file a third-party insurance claim with their auto insurer. Even though you're bringing a claim against the other driver, it's still a good idea to notify your own insurance company of the accident. Call your agent and, if the agent tells you to, report the accident in writing to the company.

Starting a third-party insurance claim isn't complicated. Simply notify the other driver's insurance company of your claim using the company's website or claims app. Best practice is to follow up with a claim notice letter to the company, too.

Filing a Lawsuit Against the Other Driver

Most car accident claims settle without going to court. Yours probably will, too. But if negotiations stall, you can file a car accident lawsuit. Before you do, discuss your options with an experienced car accident lawyer. Lawsuits are expensive, time consuming, and stressful. You don't want to invest the time and money unless you and your lawyer are confident there's a good chance you'll come out dollars ahead by suing.

Remember that New Mexico law has a deadline, called a "statute of limitations," on filing a car accident lawsuit for personal injuries. Found at N.M. Stat. § 37-1-8 (2024), the deadline is three years, usually from the date you were injured. In some circumstances you might have more time, but don't count on it.

Driving Without Car Insurance in New Mexico

Long story short: Driving while uninsured is a really bad idea. You might:

  • lose your motor vehicle registration
  • get convicted of a misdemeanor and,
  • if you cause an accident, wind up on the wrong end of a court judgment.

Your registration can be suspended. The New Mexico Department of Motor Vehicles (DMV) can't register a motor vehicle that's subject to the MFRA if it isn't insured as required by law. When there's no insurance on a vehicle that's already registered, the DMV must suspend the registration. (N.M. Stat. 66-5-206 (2024).)

It's a crime. Driving in New Mexico without complying with the MFRA—for most people, that means without an auto liability insurance policy—is a misdemeanor. (N.M. Stat. § 66-5-205.E (2024).) You can be fined up to $300, jailed for up to 90 days, or both. (N.M. Stat. § 66-8-7.B (2024).)

You might get sued. When you cause a wreck while driving without insurance, you might get sued. If that happens, you'll probably end up with a court judgment against you, ordering you to pay damages to those you injured.

If all that isn't bad enough, in order to get your car registered after a suspension, you'll have to show proof of insurance. Letting your insurance lapse makes you a high-risk customer in the eyes of insurance companies. You'll be able to get insurance, but it will cost you much more than before.

Get Help With Your Insurance Questions and Claims

If you were injured in a car accident and are thinking of bringing a claim or filing a lawsuit, your best bet will be to hire an experienced car accident attorney. This is someone who understands New Mexico's insurance requirements, and also knows the ins-and-outs of auto insurance claims and lawsuits. Here's how to find a lawyer that's right for you.

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