Property and casualty fundamentals (insurable interest, indemnity, negligence, policy structure, coinsurance) are covered in the national basics guides. This guide covers the New Mexico rules that apply across property and casualty lines: cancellation, binders, certificates of insurance, insurable interest, comparative negligence, credit-based insurance scores, surplus lines and the guaranty association. Citations are to the New Mexico Statutes (NMSA 1978).

Cancellation (NMSA 1978, 59A-18-29)

• Nonpayment: an insurer may cancel at any time for nonpayment, including through a premium finance plan, with at least 10 days' written notice.
• First 60 days: an insurer may cancel without cause within 60 days of the policy's original issue, with at least 10 days' notice effective inside that period.
• After 60 days: cancellation only for reasonable cause, with the advance notice set by the Superintendent's rules. Nonpayment cancellation is still allowed.
• A mailed notice is treated as given when deposited in the U.S. mail. Nobody is liable for giving the reasons for a cancellation.
• These rules don't apply to life, annuity, health, title, inland marine or noncancellable policies.
• Auto: an insurer can't cancel, nonrenew or raise premiums because of an accident in which the insured wasn't at fault (NMSA 1978, 59A-17-7.1).

Binders (NMSA 1978, 59A-18-22)

• A binder includes the usual policy terms and listed endorsements, unless the binder clearly says otherwise.
• A binder lasts until the policy is issued, but no longer than 90 days for a written binder or 15 days for an oral binder, whichever is shorter. With the insurer's written approval, a binder may be extended if the policy hasn't been issued.

Certificates of insurance (NMSA 1978, 59A-18-32)

A certificate of insurance shows property or casualty coverage but isn't a policy and can't amend, extend or alter it. Policies, binders, endorsements and auto ID cards aren't certificates. Certificate forms are filed with the Superintendent at least 60 days before use.

Insurable interest in property

Property insurance is enforceable only by someone with an insurable interest at the time of the loss. An insurable interest is any actual, lawful and substantial economic interest in keeping the property safe (NMSA 1978, 59A-18-6).

Homeowners discounts

Homeowners insurers must give at least a 10% discount for an electronic alarm system designed to prevent unauthorized entry, and at least 5% for wrought iron bars covering all doors and windows (NMSA 1978, 59A-17-13.1).

Negligence: pure comparative fault

New Mexico follows pure comparative negligence. An injured person's recovery is reduced by their own share of fault but never barred. Defendants are generally liable only for their own share (several liability). Joint and several liability remains for intentional injury, vicarious liability, strict products liability and a few other cases (NMSA 1978, 41-3A-1; Amrep Southwest v. Shollenbarger, 1995).

Rates and credit-based insurance scores

• Rates may not be excessive, inadequate or unfairly discriminatory. In a competitive market, rates are presumed not excessive (NMSA 1978, 59A-17-6).
• Under the Personal Insurance Credit Information Act (NMSA 1978, 59A-17A), an insurance score may not use income, gender, address, race, color, national origin, religion or marital status. An insurer can't deny, cancel, nonrenew or rate based on credit alone. Credit inquiries can't be used. Scores used at renewal must be recalculated at least every 36 months. An adverse action notice lists the four most important factors.

Surplus lines

Surplus lines coverage may be placed only through a surplus lines broker with an eligible surplus lines insurer, and only after a diligent search shows the full amount or type of coverage isn't available from authorized insurers (NMSA 1978, 59A-14-3).

Guaranty association

New Mexico's property and casualty guaranty association pays covered claims of an insolvent authorized insurer up to $100,000 per claim and per claimant per occurrence. Workers' compensation claims are paid in full, and a claim must exceed $25. Claims are covered if they existed before the insolvency or arise within 30 days after it (or before the policy is replaced or canceled). Surplus lines insurers aren't covered (NMSA 1978, 59A-43).

Common exam traps

• 10 days' notice for nonpayment. Cancellation without cause only in the first 60 days.
• Binders: 90 days written, 15 days oral.
• Property insurable interest must exist at the time of loss.
• Pure comparative negligence: recovery is reduced, never barred.
• Alarm discount at least 10%, iron bars at least 5%.
• Guaranty limit $100,000, except workers' compensation.