New Mexico has taken a significant step to support homeowners affected by recent wildfires. Alice Kane, the state’s Superintendent of Insurance, announced a temporary increase in the coverage limit for residential property under the New Mexico Fair Plan. The new cap is set at $750,000, up from the previous limit of $350,000. This change is crucial as many residents are working hard to rebuild their homes.
This interim measure will be in effect until June 20, while lawmakers discuss making these higher coverage limits permanent for both personal and commercial policies. Kane emphasized the necessity of this adjustment to help residents secure the insurance they need for rebuilding.
In addition to raising the coverage limits, the updated policy allows for builder’s risk insurance to be issued by ZIP code for a one-year term. This can be renewed for up to five years if the governor declares a state of emergency. Kane noted that further action is needed to extend commercial property coverage limits. Lawmakers are currently considering a proposal to increase commercial policy limits to $2 million, which would double the current maximum.
While these changes aim to provide relief, some industry representatives have raised concerns. Matt Hunton, president of the Independent Insurance Agents of New Mexico, warned that if insurers are required to take on risks beyond their capacity, they may reconsider their operations in the state. He pointed out that insurers, as for-profit businesses, will pull back from the market if the changes are unsustainable.
The New Mexico Fair Access to Insurance Requirements (FAIR) Plan, established in 1969, serves as a safety net for property owners who cannot secure insurance through traditional means, especially in areas at high risk for wildfires. In November, the Office of the Superintendent of Insurance requested a $50 million boost to enhance the Fair Plan’s capacity.
Earlier this year, Senate Bill 81 was introduced, which initially aimed to raise personal property limits to $1 million and commercial limits to $5 million. However, these figures were amended to the current limits of $750,000 for personal coverage and $2 million for commercial coverage.
Hunton also cautioned that these legislative changes could lead to higher premiums for policyholders. As New Mexico works to adjust its insurance framework, the situation remains dynamic, with many looking for solutions that balance risk and affordability.