New Mexico’s FAIR Plan Gets $300K Coverage Boost

New Mexico homeowners with higher-value properties can now apply for wildfire coverage through the state’s insurer of last resort. The New Mexico FAIR Plan will now cover high-risk homes valued at up to $750,000.

Previously, the plan’s dwelling coverage limit was $350,000.

New Mexico’s superintendent of insurance, Alice Kane, approved the increase in mid-July.

“This move to increase residential rates … is a promising step forward to better serve the more than 7,200 residents and 280 businesses enrolled in the FAIR Plan,” Kane said in a press release. “I am committed to making further improvements to the plan that will truly make an impact on New Mexicans in need.”

FAIR Plan fills in gaps for New Mexico homeowners

New Mexico’s FAIR Plan offers home insurance to homeowners in high-risk areas who haven’t been able to get coverage from standard insurers.

The state has the second-most uninsured homes in the country, at 13%. Since Jan. 1, 2021, the state’s top 10 insurers have non-renewed more than 10,000 homeowner policies, according to the Office of the Superintendent of Insurance (OSI). And many homeowners who have insurance don’t have enough, the OSI reports.

Going without home insurance or underinsuring a home can have financially devastating consequences.

“Homeowners’ policies often contain a clause that requires a policyholder to at least insure their home to a certain percentage of the replacement value — typically 80%,” said Shawn Powers, vice president of sales operations at Insurify. “Failure by a policyholder to do so means they may receive a significantly reduced payout in the event of a loss.”

Typically, this reduced payout is only 60%.

Kane hopes the increase in FAIR Plan coverage limits will help homeowners get insurance and protect them during future wildfires.

“It is clear that more must be done to aid New Mexicans still recovering from wildfire devastation and to help residents prepare for future, potential wildfires,” Kane said.

What’s next? New Mexico’s home insurance rates to increase

Insurify projects that home insurance rates in New Mexico will rise by 6% in 2025, climbing to a state average of $4,745 per year. New Mexican homeowners currently pay an average premium of $4,460, compared to the national average of $3,259.

Recent natural disasters contribute to the state’s higher-than-average rates and increased policy non-renewals. These include the South Fork and Salt wildfires that ripped through Ruidoso in June 2024. Those fires burned more than 24,000 acres of land and caused millions in damage. Homeowners in the Ruidoso area are still struggling to secure policies and are experiencing a high number of non-renewals.

In addition to increasing the FAIR Plan policy limits, the New Mexico OSI is also trying to distribute $10 million in grants to help homeowners with fire mitigation.

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