Homeowners Insurance New Mexico

Read our Advertiser Disclosure.
Contributor, Benzinga
October 25, 2019

Those who aren’t from the southwest may not realize that it does get cold in New Mexico during the winter, and temperatures frequently dip below freezing. Unfortunately, that can cause burst pipes and other conditions that can damage your home. That's why finding the best New Mexico homeowners insurance is just as important as any other state.

For more information about homeowners insurance, check out Benzinga’s top-rated Best Homeowners Insurance Companies.

The Best Homeowners Insurance in New Mexico

Average Annual Premium in New Mexico

Lower-than-average home insurance rates in New Mexico reflect lower-than-average risk from nature-related perils and home values that are slightly below the national average. According to data collected by the Insurance Information Institute, homeowners in New Mexico pay an average of $937 to insure their homes, compared to a national average of $1,132.

Home insurance rates are also based on individual rating factors, so rates can vary significantly from averages. And be careful about placing claims — New Mexico homeowners face one of the country’s largest average percentage increases following a first claim — a jump in rates of nearly 20 percent. Second claims face a similar increase in premiums.

Finding the Best Premium for your Home

Unless you’ve had a claim and understand firsthand how helpful home insurance can be when disaster strikes your home, insurance can seem like a nuisance expense, one that leaves us wondering why we’re paying so much year after year. It’s tempting to trim coverages or to be wooed by a lower quote from a competitor, but be sure to understand the details of your coverage, including what isn’t covered.

Home insurance policies provide coverage in three main areas, and also usually provide some additional coverages which are related to those three:

  • Dwelling coverage
  • Personal property coverage
  • Liability coverage

A standard home insurance policy also includes additional living expense (ALE), an allowance for out-of-pocket expenses for hotels or eating out if your home is temporarily uninhabitable due to a covered claim. You’ll sometimes also see this coverage called loss of use, although loss of Use is a broader term in other types of policies.

Medical Payments coverage is another part of a standard home insurance policy that offers either $1,000 or $5,000 in coverage for injuries to others. With the rising cost of medical care, the $5,000 limit is a well-priced upgrade, usually adding less than $10 per year to policy premiums.

Dwelling Coverage

The largest part of your home insurance premium pays to insure the house itself, called the dwelling. Other structures, such as sheds, fences, and gazebos, are covered under a separate coverage, usually with a default coverage limit set at ten percent of the dwelling coverage limit. You can change this amount as needed.

In modern underwriting, insurers use specialized software to calculate the cost to rebuild your home, including any special features like bay windows or cathedral ceilings. The rebuild cost of your home, which is usually used as the insured value, can differ from the market value of your home. Calculated rebuild values are often ten percent higher than the market values of homes, and sometimes even higher in certain markets where home pricing is depressed or volatile.

If the calculated rebuild cost of a home is $250,000, the default coverage for other structures will be $25,000. A standard HO-2 policy or HO-3 policy will pay up to those limits to rebuild your home if it’s damaged in a covered claim, but there are some common exceptions or limitations.

Roof coverage is less than 100 percent of the roof’s rebuild cost on most policies. The most frequent type of home insurance claim is wind and hail, causing an average of over $8,000 in damage to a home, primarily to the roof. However, roofs are treated as “wear items” by many insurers. Coverage for a roof is often based on a depreciating value which decreases as the roof ages.

Allstate, for example, pays claims for roofs older than ten years at actual cash value (a depreciated value). Considering that homeowners stay in their home for 13 years on average, during at least part of that time, the roof of the home will be only partially insured. Allstate isn’t the only company that uses this coverage structure. Many insurers have moved to this model, but some provide options to add better roof coverage to your policy — at a price.

Roofs may be only partly covered, but some parts of your home aren’t covered at all by a standard home insurance. Service lines running from your home to water mains and other services aren’t covered by most home insurance policies and water backup and sump pump overflow aren’t covered without an endorsement, which is an add-on that changes your coverage.

Land movement, a common cause a cracked foundations and damage to walls also isn’t covered. Some insurers provide an optional endorsement for land movement but others will require a separate policy for coverage. Coverage for flooding will also require a separate policy.

When shopping for a policy, ask about the policy type. Two types of policies are commonly sold for single family homes in New Mexico: an HO-2, which covers 16 named perils, and an HO-3 which covers the dwelling for all perils except those that are specifically excluded, like floods and land movement.

Ideally, you’ll want the better protection provided by an HO-3 policy, which is limited only by the named exclusions. With its more limited coverage, an HO-2 policy leaves gaps that can become costly surprises if your home is damaged by any peril that isn’t specifically named on the policy. (A peril is the insurance term for a risk, something that can damage your home.)

Personal Property Coverage

Your home keeps your family safe, but also keeps your things safe. In the insurance world, your belongings are called personal property — and your home insurance policy provides some protection for your belongings. However, it’s important to understand the details when choosing personal property coverage.

A standard home insurance policy provides personal property coverage with a coverage limit based on a fixed percentage of the dwelling coverage limit. A home insured for $200,000 might come with a standard personal property coverage limit of $100,000, or 50 percent. This coverage limit can be changed as needed, but usually the details of coverage are a bigger concern than the total coverage amount.

A home insurance policy with a personal property coverage limit of $100,000 will usually have smaller coverage limits for certain types of items. Jewelry, for example, might have a coverage limit of $5,000 and a single item coverage limit of $1,000. Similar limitations on coverage are often found with other types of items such as firearms, coins, silverware, furs, etc.

These items or other valuables can be covered for their full value either by adding them to your policy as scheduled items or by purchasing a separate policy, sometimes called a personal articles policy. In either case, specifically ensuring your valuables will require a recent receipt or an appraisal which states the value and description of the item.

While most of your home is covered for replacement cost, which is the amount it will cost to repair the damage or replace the damaged parts of your home, personal property coverage is usually structured as actual cash value (ACV). With actual cash value coverage, your belongings are covered for a depreciating amount based on wear and tear due to age.

For example, if you purchase a television for $700 and you have a claim a few years later, your insurer might only pay $350 for that television with actual cash value coverage. Electronics tend to go down in price, so the replacement cost for the television might be $650, which is how much your insurer will pay if your personal property is covered for replacement cost value (RCV).

Replacement cost coverage is an option with some policies and standard with select policies from some insurers, but most home insurance policies provide actual cash value coverage for personal property.

Your personal property coverage covers your belongings wherever they are in the world, with a few exceptions specific to insurers, including a common percentage-based limit that lowers coverage for items outside of the home to a small percentage of your total personal property coverage limit.

In practical application, coverage outside the home is more valuable for losses of expensive items, like jewelry. If your phone or laptop is stolen from your car, you will have coverage under your home insurance policy but that coverage will be for a depreciated amount if you have actual cash value coverage — and after the deductible is subtracted from the claim amount, you might not be paid for the claim at all.

If you can find it, either as an available endorsement (add-on) or as standard with a policy, coverage for replacement cost provides much better coverage for your belongings than actual cash value, which can leave costly coverage gaps.

Personal Liability Coverage

Accidental injury to others or accidental damage to the property of others is covered by personal liability insurance, which is included with HO-2 policies or HO-3 homeowners insurance policies. Condo and renters insurance policies also offer coverage.

The base amount of coverage is $100,000, but coverage for $300,000 can be purchased with your policy for about $20 per year. Behind fires, personal liability claims have the highest average claim payout for home insurance policies.

Accidents happen, both at home and away from home, and your personal liability coverage is always there, providing protection. Many personal liability claims don’t involve lawsuits but if there is a liability lawsuit, your personal liability coverage will help pay toward your legal defense as well. Any legal defense costs are usually outside of your coverage limits.

For example, if you are sued for your policy limit of $100,000 and your legal defense costs are $25,000, your policy will pay up to $125,000 because the legal costs don’t reduce the coverage amount for claims.

Most homeowners carry $300,000 in personal liability coverage, a good starting point. The thing to remember is that if you are found liable for an amount higher than your coverage limit, you are still liable for the balance. A judgement could force a liquidation of assets or cause your earnings to be garnished until the balance is paid. Raising your personal liability limits are among the least expensive changes you can make to a home insurance policy.


The deductible is the part of the claim that you pay, and no insurance policy is complete without one — or two. You’ll have a deductible for wind/hail, grouped as a single peril, and another deductible for all other perils. If you’ve chosen an endorsement for land movement, this coverage usually has its own deductible as well.

If you place a claim and the claim is covered, the deductible amount you’ve chosen is subtracted from your claim payment. For smaller claims, the deductible can eliminate the claim payout altogether.

Higher deductibles can lower your premium but can also take a big chunk out of claim payments. When choosing a deductible, be sure the amount you choose is a realistic number for your budget.


Discounts are another way to help bring your premiums down, with the most common discount being a multi-policy discount. Bundling your home and auto insurance with the same insurer can generate a discount on both policies, although the discount amount varies from one insurer to the next — and not all insurers offer this discount.

Among the most common discounts offered for home insurance are:

  • Multi-policy discounts
  • Senior discounts
  • New home buyer discounts
  • Home safety features
  • Length of coverage with prior insurer
  • Loyalty discounts
  • Claims-free discounts
  • New customer discounts
  • Discounts for affinity groups

Be sure to ask which discounts are available. You may qualify for more than one, perhaps several.

Inclement Weather in New Mexico

In 2015, New Mexico’s governor declared a state of emergency as parts of the state faced heavy snow and wind, creating drifts of snow eight to ten feet tall. This seems like a news blurb from a northern state, but New Mexico has a zany mix of weather to balance out its perfect, sunny days.

The remnants of saltwater storms blow in from the Gulf of Mexico and the Gulf of California, bringing rain, but thankfully, less wind damage than in coastal states. Leave the wind to the tornadoes, sometimes accompanied by golf-ball-sized hail.

Despite the occasional violent storms, New Mexico is generally drier than many other states, providing a perfect environment for wildfires. At any given time, dozens of wildfires are burning throughout the state.

The ways in which nature can damage a home are seemingly countless. An HO-3 policy or an HO-5 policy will provide the most protection for your home, but not for everything. Floods and land movement remain among the largest perils that are not covered by a home insurance policy.

Flood Insurance

Heavy rains that quickly saturate the soil can turn neighborhoods into lakes and rivers and New Mexico is no stranger to floods. Unfortunately, floods aren’t covered by even the best of home insurance policies. Coverage for floods requires a separate policy that insures your dwelling and your personal property against damage from floods — but for nothing else.

Your home insurance policy will take care of household water mishaps like overflowed tubs or burst pipes, but if the water touched the ground before it came into your home, that’s a flood — and only a flood policy will cover the damage.

Personal property stored outside or in crawlspaces or basements aren’t covered, unless they are part of the house, like heating or air conditioning units. Cars and other vehicles also won’t be covered by a flood insurance policy.

Most insurance agents can quote and bind flood insurance. Premiums are based on your flood zone, which is determined by FEMA maps that consider elevation and proximity to water. Insured value will also drive premiums, with homes insured for more having higher premiums.

Most Affordable Cities

Average rates may be lower than the national average in New Mexico, but some areas are more expensive than others.

Average rates by geographic area can be influenced by a number of factors, including crime rates, nature-related risks in that area, distance from a fire station, proximity to water, and the average size of homes, which affects the cost of rebuilding in the event of a claim.

Some of the most affordable cities in New Mexico for home insurance include:

  • Las Cruces
  • Deming
  • Alamogordo
  • Grants
  • Silver City

Most Expensive Cities

Among some of the more expensive cities in New Mexico for home insurance are:

  • Carlsbad
  • Lovington
  • Clovis
  • Hobbs
  • Artesia

Top Picks for New Mexico

Best For
  • Those who own investment properties

1. Farmers

Started in 1928, Farmers has grown from a dream to provide a quality insurance product at a reasonable price into the Farmers Insurance Group of Companies, which collectively comprise one of the largest insurers in the market.

Having several companies within the Farmers’ family provides multiple options for underwriting and allows Farmers to offer a policy for nearly every insurance need. Replacement cost coverage is available for personal property and Farmers offers a unique eco-rebuild option, which provides up to $25,000 in extra coverage to rebuild, repair, or replace with green contents and materials if your home is damaged in a covered claim.

Multi-policy discounts are available and Farmers also offers discounts for new roofs and non-smokers.

Liberty Mutual
Best For
  • Tailored coverage

2. Liberty Mutual

Since 1912, Liberty Mutual has been owned by its customers, giving the company the extra accountability and commitment to service that comes with being a mutual insurance company.

Liberty Mutual’s special home insurance policy features include its Home Protector Plus, which provides coverage for unforeseen costs when rebuilding your home or replacing personal property, and inflation protection, which helps the insured value of your home keep pace with inflation.

Liberty also offers personal property replacement service, which can locate and ship replacements for personal property damaged in a covered claim. Liberty Mutual’s list of available discounts is expansive, including discounts for bundling home and auto, safety discounts, and discounts for new renovations.

Best For
  • No Recent Claims

3. Allstate

Many insurers have changed their service model in recent years, moving the insurance buying process online, sometimes leaving customers unsure of what they’ve purchased or what coverage is included in their policy. If you want to start the insurance buying process online with Allstate, the Illinois-based insurer provides that option — but also offers one of the largest networks of exclusive agents in the business.

Because insurance needs are so individualized, treating insurance as one-size-fits-all often does a disservice to customers and overlooks additional needs that may come up when meeting in person with an agent. Valuables, like jewelry or collectibles, can be added to your home insurance policy as scheduled items, insured to full value. Discounts include multiple-policy discounts and discounts for customers who are new to Allstate.

Read Benzinga’s full Allstate Home Insurance Review

State Farm
Best For
  • Customers who have existing policies with State Farm

4. State Farm

Similar to Allstate, State Farm offers online service but maintains a massive network of exclusive agents, providing local service for most communities. State Farm is noted for its agents’ knowledgeability and for its expansive product selection.

Customers with multiple homes, including landlords, will find a policy for every home with State Farm. Valuables can be insured with a personal articles policy, insuring your jewelry or other expensive items to their full value on a flexible policy that can protect nearly any type of personal property. Multiple policy discounts are available with impressive discount percentages and claims-free customers are recognized with lower premiums.

USAA Home Insurance
Best For
  • Members of the armed forces and their families


Unique due to both its customer base and its product features, USAA provides insurance to members of the military and their families. The company also extends membership to the family members of existing USAA members, broadening its market reach and bringing USAA’s financial services to more people.

USAA puts a bulls eye on customer service, frequently topping the charts in customer satisfaction surveys both for price and for claims service. Full replacement cost coverage for personal property is included with home insurance policies and multi-policy discounts of up to ten percent are available for insuring your home and auto with USAA.

Final Thoughts

If you’re like many homeowners, buying a house is the largest single purchase in your lifetime. Homes can be damaged in countless ways, and the costs to repair your home can range from hundreds up to a total loss in the hundreds of thousands.

Home insurance doesn’t cover everything and it’s important to understand what is covered and how to fill the gaps in coverage that exist on most policies.

At some point during your insurance buying journey, try to make the time to meet with an agent in person. Discuss your needs and concerns, and bring a list of questions. A dialogue with an agent can uncover other coverage needs and provide easy solutions to coverage questions that might take more time to decipher online.

Compare quotes, but also compare coverage. If you ever do have a claim, like one in 15 homes will this year, you’ll be glad you invested the time in finding the right policy for your home.

Frequently Asked Questions


1) Q: If my home is destroyed due to fire or weather, how long will it take for my insurance claim to be settled and my home to be repaired?


From start to finish, the process could take anywhere from 12 to 24 months. The variables that play the largest role are the size of the loss and the insurance company you choose. Check her for the cheapest homeowners insurance quote.


2) Q: What can I do to ensure that my home is properly covered?


The most important thing you can do is have a conversation with your agent or carrier to be sure you have the right amount of coverage. Avoid putting just the minimum coverage on your home: Remember, if your home is destroyed, you need to have enough coverage to rebuild the entire home, so you’ll want to insure it for more than just the market value. Also, notify your insurer of renovations or changes that you make to your home — and don’t forget to check to be sure you have enough liability coverage. Get the best quote today from our top providers.


3) Q: How does my home insurance deductible work?


The deductible is the part of the claim that you pay and the deductible amount will be deducted from the payout on covered claims. Your deductible can be either a fixed amount, like $1,000, or it can be a percentage of the insured value of your home, such as 2%. In many states, it’s common to have a deductible for damage due to wind or hail as well. Damaged caused by these risks can trigger a special wind/hail deductible, which is usually percentage-based.