Liability Insurance Coverage
Liability insurance coverage helps protect an insured driver who causes injury to another person or damages another person’s property due to an automobile accident. This type of insurance does not cover the insured person who caused the injury or damage, nor can a person who is responsible for the accident claim any benefits under their own liability coverage. On the other hand, passengers in an insured vehicle that is found to be at fault can submit claims for their losses.
New Mexico law requires automobile drivers to have minimum liability policy limits that includes $10,000 per accident for property damage, $25,000 per person for bodily injury or death caused to one person, and $50,000 for each accident that results in bodily injury or death to two or more people. These limits dictate the maximum amount that an injured party may recover against the insurance company.
While the minimum liability limits are mandatory, drivers are free to purchase coverage above the state mandated minimums. It is easy to see how the $50,000 minimum may not cover all expenses claimed, leaving the at-fault party financially responsible for the damages above and beyond the policy limits. More often, however, it is the injured person that bears the burden of the insufficient insurance coverage since the underinsured driver likely has few financial resources from which to cover any excess judgment or verdict.
Due to great burden placed on New Mexico's high number of uninsured or underinsured drivers, there are serious consequences for failure to carry insurance. When a vehicle does not carry the mandatory minimum liability coverage, it is subject to a suspension of registration. The vehicle registration and license plate must be returned to the Motor Vehicle Department (MVD) within 10 days of receiving a Notice of Suspension of Registration letter. If this is not done, the owner may also be subject to criminal penalties.
New Mexico uses an Insurance Identification Database that matches auto insurance information from insurance companies with vehicles registered at the MVD. This tool was created to help reduce risks to New Mexico citizens by uninsured motorists and to assist in enforcing the state’s mandatory liability insurance policy.
Despite all the efforts by the State to gain compliance with the liability insurance requirements, New Mexico ranks at the top of all states for the percentage of uninsured drivers. Consequently, it is wise to purchase underinsured motorist coverage since this is very possibly the only coverage that will be available to a person injured in an car accident.