In the wake of recent wildfires that destroyed over 1,400 structures, New Mexico officials have raised the Fair Plan residential property coverage limits to support rebuilding efforts. The cap for protected homes has increased from $350,000 to $750,000.
According to the Office of the Superintendent of Insurance, the coverage for unprotected residential dwellings also rose, from $225,000 to $500,000. These changes apply to single - through four-family occupied homes insured under the New Mexico Fair Plan, the state’s insurer of last resort. Commercial property limits remain unchanged.
The new limits took effect on July 7 and are based on the level of fire protection available in the area. According to Alice Kane (main picture), New Mexico’s superintendent of insurance, the adjustments were made following consultation with the Fair Plan governing committee.
Kane previously instituted temporary coverage increases in March, which expired in late June. She cited the urgency of providing greater insurance coverage as communities work to recover from wildfire damage, including the South Fork Fire.
That wildfire, discovered on June 17, 2023, burned more than 15,000 acres in and around the Village of Ruidoso, as well as on Mescalero Tribal and U.S. Forest Service land. The Village of Ruidoso reported that approximately 1,400 structures were affected.
Efforts to permanently increase the coverage caps through legislation were unsuccessful. Senate Bill 81, introduced in January, proposed raising personal property limits under the Fair Plan to $1 million and commercial limits to $5 million. Lawmakers later amended the bill to reduce the proposed limits to $750,000 and $2 million, respectively. The bill stalled in committee and did not advance.
Senate majority leader Peter Wirth said the proposed increases were aimed at keeping pace with rising construction costs and the frequency of natural disasters. Insurance industry groups raised concerns about the potential effects of such increases on market stability.
Real estate data provides additional context for the change. According to Bankrate, the median sale price of a home in New Mexico in January 2024 was $345,100, a 2% drop from the same period the year before.
BestLink data for 2024 shows the five largest homeowners multiperil insurers in the state by direct premiums written are State Farm Group (20.02%), Farmers Insurance Group (15.93%), USAA Group (12.16%), Liberty Mutual (10.64%), and Allstate Insurance Group (8.65%).
Are the new coverage limits adequate to meet homeowners’ rebuilding needs? Share your thoughts in the comments.
