New Mexico Superintendent of Insurance Alice Kane (pictured above) has instituted an interim maximum residential property limit of $750,000 for New Mexico Fair Plan policies.
The temporary increase, up from the previous $350,000 cap, is in place while lawmakers consider making higher coverage limits permanent for both personal and commercial policies.
Kane said the increase is immediately necessary as residents work to rebuild homes lost to wildfires. The Fair Plan board has approved the measure, which will remain in effect until June 20.
She said the adjustment is a step toward helping residents obtain home insurance coverage needed for rebuilding efforts.
Along with raising policy limits, the provisional approval allows builder’s risk policies to be issued by ZIP code for a one-year term, with the option to renew for up to five years when the governor declares a state of emergency, according to the superintendent’s office.
Kane also said further action is needed to extend commercial property coverage limits under the Fair Plan. New Mexico lawmakers are considering legislation that would increase commercial policy limits to $2 million, doubling the current maximum.
Some industry groups, however, have expressed concerns about the proposed changes.
Matt Hunton, president and chief executive officer of Independent Insurance Agents of New Mexico, said insurers may reconsider their presence in the state if required to assume risks beyond their capacity. He said that as for-profit businesses, insurers will withdraw from the market if forced into unsustainable practices.
Established in 1969, the New Mexico Fair Access to Insurance Requirements (FAIR) Plan serves as a vital safety net for property owners unable to secure insurance through traditional markets, particularly in high-risk areas prone to wildfires.
While specific payout figures for 2024 are limited, the Office of the Superintendent of Insurance (OSI) has sought a $50 million boost to the state’s Fair Plan to enhance its capacity back in November.
Senate Bill 81, introduced in January, initially proposed raising personal property limits to $1 million and commercial limits to $5 million. The bill has since been amended to reduce those amounts to $750,000 for personal coverage and $2 million for commercial.
Hunton also said the legislation could lead to higher premiums for policyholders.
In other states, the Colorado Division of Insurance has recently released draft regulations outlining how insurers participating in the state’s new Fair Plan can recover participation fees from policyholders.
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