If you own a home in New Mexico, you've probably noticed something alarming: your insurance premiums are climbing, and some neighbors are struggling to get coverage at all. The 2024 South Fork and Salt fires near Ruidoso destroyed over 1,100 homes and made something painfully clear—wildfire isn't a distant threat in New Mexico. It's a present reality that's reshaping the entire home insurance landscape.
Here's what you need to know: 43% of buildings in New Mexico face wildfire risk, making this one of the highest-risk states in the country. And insurers are responding by raising rates, refusing to renew policies, and pulling out of high-risk areas entirely. But there are options—if you know where to look and what steps to take.
Why Wildfire Insurance Costs Are Skyrocketing in New Mexico
The numbers tell a stark story. New Mexico's top 10 insurers increased premiums by 60% on average since 2022. In fire-prone counties, the increases have been even steeper—between 41% and 47%. The average homeowners insurance premium in New Mexico now sits around $4,460 per year, well above the national average of $3,259, and projections show it could climb to $4,745 in 2025.
But rising premiums are only part of the story. Between January 2021 and July 2024, those same top 10 insurers declined to renew more than 10,000 policies. The state regulator noticed a significant jump in non-renewals starting in 2023, and that trend has continued. The result? Roughly 13% of properties in New Mexico are now uninsured—the second-highest rate in the entire country, behind only Mississippi.
Why such dramatic changes? The losses insurers have experienced are staggering. In certain ZIP codes, the loss ratio reached 3,516% in 2022. That means insurers paid out more than 35 times what they collected in premiums—a financially unsustainable situation that's forcing companies to either raise rates dramatically or exit the market entirely.
What Does Standard Home Insurance Cover for Wildfire?
Here's the good news: if you can get a standard homeowners policy, wildfire damage is typically covered under the fire peril. This isn't a separate policy or add-on—fire coverage, including wildfire, is a fundamental part of standard homeowners insurance.
A typical policy covers your dwelling (the structure of your home), other structures like detached garages or sheds, personal belongings, and additional living expenses if you're displaced while your home is being repaired. If a wildfire destroys your home, your policy should cover the cost to rebuild it up to your coverage limits. If smoke damage ruins your furniture and electronics, that's covered too. And if you need to live in a hotel for three months while your home is rebuilt, your additional living expenses coverage kicks in.
The challenge in New Mexico isn't whether wildfire is covered—it's whether you can get a policy at all, and at what price. After the 2024 Ruidoso fires, about 10% of the 1,100 affected households didn't have adequate insurance. Some had let policies lapse due to cost. Others had been non-renewed and hadn't found replacement coverage. A few had coverage limits that were too low to fully rebuild.
The New Mexico FAIR Plan: Your Safety Net Option
If you've been denied coverage by traditional insurers or received a non-renewal notice, the New Mexico FAIR Plan is your backstop. FAIR stands for Fair Access to Insurance Requirements, and it's designed to be the insurer of last resort for property owners who can't get coverage in the regular market due to high wildfire risk.
In 2024, the state made significant improvements to the FAIR Plan. Coverage limits for residential properties (one to four family dwellings) increased from $350,000 to $750,000 statewide. That's a meaningful change if you're trying to insure a higher-value home. Currently, about 7,200 New Mexico residents use the FAIR Plan, along with 280 businesses.
The FAIR Plan covers fire, extended coverage perils, and vandalism or malicious mischief for both buildings and contents. It's basic coverage—you won't get all the bells and whistles of a premium policy—but it protects you against the perils most likely to cause catastrophic loss in New Mexico.
Keep in mind that FAIR Plan coverage typically costs more than standard market insurance because it's covering properties that insurers view as higher risk. But it's there when you need it. You can find application information at nmpropertyinsurance.com.
Wildfire Mitigation: Protecting Your Home and Your Coverage
Taking steps to protect your property from wildfire isn't just smart for safety—it can help you keep your insurance coverage and potentially access state grant money. New Mexico is investing $10 million in fire mitigation grants for homeowners in high-fire-risk areas who have FAIR Plan coverage. These grants can provide up to $7,000 to help pay for wildfire mitigation measures.
What kinds of improvements matter? Fire-resistant roofing is a big one—it's why many of the initial grants focus on roof upgrades. Creating defensible space around your home by clearing brush, dead vegetation, and flammable materials within at least 30 feet of your structure makes a significant difference. Using fire-resistant materials for decks, siding, and fencing helps too. Keeping your gutters clear of debris, installing ember-resistant vents, and maintaining your property by removing dead trees and trimming branches away from your roof all contribute to reducing your risk.
The state also encourages homeowners to follow Insurance Institute for Business & Home Safety (IBHS) standards for home hardening. And if your community participates in Firewise USA—a program within the National Fire Protection Association that helps high-risk areas take steps to mitigate wildfire damage—implementing those measures may help with insurance availability.
Unlike California, which requires insurers to offer wildfire mitigation discounts, New Mexico doesn't currently mandate such discounts. But taking these steps can still make a difference in whether you can get coverage at all, and it demonstrates to insurers that you're serious about reducing risk.
What to Do If You're Facing a Non-Renewal or Can't Find Coverage
First, don't panic—and don't let your coverage lapse. If you receive a non-renewal notice, you typically have time before your policy ends to find alternatives. Start by working with an independent insurance agent who can shop multiple carriers on your behalf. Some insurers are still writing policies in New Mexico, even in higher-risk areas, though they may be more selective or charge higher premiums.
If you can't find coverage in the standard market, apply for the FAIR Plan immediately. Don't wait until your current coverage expires. Having a gap in coverage can make it even harder to get insured later, and it leaves you financially exposed.
Document all the wildfire mitigation steps you've taken. Take photos of your defensible space, fire-resistant materials, and any improvements you've made. This documentation can help when applying for coverage or appealing a denial. And if you have a FAIR Plan policy, look into the state's mitigation grant program—those funds can help you make additional improvements that might eventually help you transition back to the standard market.
Finally, make sure your coverage limits are adequate. After a wildfire, rebuilding costs can be higher than you expect due to increased demand for contractors and materials. Consider replacement cost coverage rather than actual cash value, and make sure your dwelling coverage limit would actually cover the full cost to rebuild your home at today's construction prices.
The wildfire insurance situation in New Mexico is challenging, but you have options. Whether you're dealing with a non-renewal, facing steep premium increases, or just want to protect your home better, taking action now—implementing mitigation measures, exploring your coverage options, and staying informed about state programs—puts you in a stronger position. Ready to review your coverage or explore your options? Connect with an independent agent who can help you navigate the current market and find the best solution for your situation.
