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Wildfires, floods, severe storms, and landslides are all natural disasters common in New Mexico. Fire, lightning, and wind damage should be covered by your home insurance policy, but you'll need supplemental coverage to protect against floods and other hazards.
There are a lot of misconceptions about natural disasters and house insurance. According to the Insurance Information Institute (III), 28% of Americans believe basic home insurance policies cover flood damage from hurricane storm surges, and 29% believe earthquakes are protected.
When calamity hits and insurance doesn't pay, homeowners can be left stranded.
It can be even harder to understand what’s covered when you look at natural disasters at the state level. Which natural disasters are most prevalent in New Mexico, and are they covered by house insurance? The home and car insurance super app Jerry is going through everything you need to know about natural disasters and homeowners insurance in New Mexico down below.
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What is homeowners insurance—and what does it cover?
A homeowners insurance policy protects your home and its contents, while also providing coverage for loss of use, liability, and medical expenses for visitors hurt on your property. Policies can differ in both coverage levels and perils covered.
Levels of homeowners insurance coverage
HO-1: The most basic homeowners insurance coverage (HO-1) only covers your primary residence and excludes personal items, loss of use, and liability. Named perils like fire, lightning, hail, and wind damage are often included in HO-1 policies.
HO-2: HO-2 is another form of named perils coverage, which protects damages to your house and personal belongings caused by named perils in your policy.
HO-3: An HO-3 policy is the most prevalent type of home insurance policy. This includes coverage for the main structure, any additional structures (for example, a greenhouse or shed), personal property, loss of use, liability, and medical payments.
When it comes to the main structure, HO-3 insurance is an open perils policy, which means it covers any peril except for those specifically stated as not covered. Personal property coverage, though, is limited to certain perils.
HO-5: If you're searching for the gold standard in home insurance, an HO-5 policy is the way to go. It protects both your house and possessions as an open perils policy—but expect to pay increased rates for this increased coverage.
That’s a lot of info to take in—we’ve broken it down in the table below for easy perusing:
|Policy type||What’s covered||Open perils?|
|HO-1||Main structure only||Named perils only|
|HO-2||Main structure, personal property, loss of use, liability, medical payments||Named perils only|
|HO-3||Main structure, personal property, loss of use, liability, medical payments||Main structure is open perils, personal property is named perils only|
|HO-5||Main structure, personal property, loss of use, liability, medical payments||Yes|
What perils are covered by homeowners insurance?
If you have HO-1, HO-2, or HO-3 insurance coverage, it's critical to understand which risks are covered. You'll have to take a close look to determine the specific coverage provided by your policy, but you can normally expect protection for the following 16 named perils:
- Fire and lightning
- Volcanic eruption
- Riot or civil commotion
- Hail and windstorms
- Damage caused by vehicles
- Damage caused by aircraft
- Theft or malicious mischief
- Falling objects (usually not covered by HO-1)
- Weight of snow, ice, or sleet (usually not covered by HO-1)
- Water overflow or discharge from plumbing (usually not covered by HO-1)
- Water heater cracking (usually not covered by HO-1)
- Damage from electrical current (usually not covered by HO-1)
- Frozen pipes (usually not covered by HO-1)
Take particular note of anything that isn't on the list. Many homeowners are unaware that floods and earthquakes are not covered by their insurance, which is a concern given that they are two of the most prevalent natural disasters in the United States.
Because most homes insurance policies do not cover all natural disasters, it's critical to understand what your policy does and does not cover—especially in disaster-prone states like New Mexico.
Key Takeaway Your homeowners insurance coverage depends on your policy type and the specific perils listed on your policy.
Does home insurance cover natural disasters in New Mexico?
According to U.S. News, New Mexico is one of the top ten states most vulnerable to natural disasters.
Part of the reason comes down to New Mexico’s famous size. As the second-largest state in the country and the largest in the Lower 48, New Mexico is home to eight distinct climates. From tornadoes in the Panhandle and earthquakes across the state to hurricanes along the Gulf Coast, New Mexico sees more major disasters than any other state in the country.
New Mexico’s hot, dry climate is the perfect breeding ground for an intense wildfire season. The largest fire in New Mexico’s history occurred not too long ago, with the Whitewater-Baldy Complex fire in 2012 burning 278,708 acres. New Mexico also sees a number of flash floods and some hurricane remnants that cause damage to homes and property.
Let's look at some of New Mexico's most frequent natural disasters to see what is and isn't covered.
According to the Insurance Information Institute, New Mexico has the eleventh-highest rate of wildfires in the country. An estimated 131,600 properties in New Mexico are at risk from wildfires—that’s 15%!
Does homeowners insurance cover fire damage?: Yes. Fire damage is covered by all types of home insurance, from the most simple HO-1 coverage to the most expensive HO-5 policy.
Significant flooding has occurred in New Mexico in recent years. Over 5 inches of rain fell in a 24-hour period in June 2021, and Carlsbad's Dark Canyon flooded 19 feet in one hour. These flash floods also resulted in over 30 New Mexico roadways being shut down.
Unfortunately, damage caused by external flooding isn’t covered by most standard homeowners insurance policies. While you’ll likely be covered in the event of an accidental pipe burst in your basement, you won’t find as much luck trying to file a claim after a flash flood.
If you live in an especially flood-prone area (like along the Rio Grande), you might want to purchase a separate flood insurance policy.
Does homeowners insurance cover flooding?: No, you’ll have to purchase a separate flood insurance policy. The National Flood Insurance Program (NFIP), managed by FEMA, sells flood insurance to homeowners.
Seismic activity in New Mexico has increased dramatically in recent years, owing in part to the oil industry. Throughout the state, there are currently 20 active faults. In November 2021, the state saw 18 earthquakes with magnitudes greater than 3.0 on the Richter scale, and 70+ quakes with magnitudes between 1.0 and 2.0.
Luckily, New Mexico rarely sees earthquakes that cause extensive damage to properties or infrastructure.
Does homeowners insurance cover earthquakes?: No, a separate policy is required.
New Mexico’s various natural disasters combine to make the perfect conditions for mudslides—wildfires leave the soil without vegetation to hold onto, and subsequent flash floods can lead to destructive mudslides.
Mudslides will mainly be a risk to New Mexico homeowners if they live in an area prone to these natural disasters.
Does homeowners insurance cover mudslides?: No, you’ll need to purchase a separate policy to protect against mudslides.
Key Takeaway Your homeowners insurance should cover claims associated with wildfires, but you may need additional coverage for flooding, earthquakes, and mudslides.
How to file a home insurance claim
No matter where you call home in New Mexico, your home insurance policy should ideally cover some of the numerous natural disasters that homeowners in the state encounter. To file a claim if your home or personal property is damaged by a natural disaster, here are the steps you should take:
- Keep track of your losses. Take pictures and write a list of the items that have been damaged.
- Notify your insurance provider that you intend to file a claim. They'll appoint an adjuster to go over the evidence.
- Calculate how much you paid for every item (collecting receipts, especially for large-ticket purchases, will help!).
- Complete the claim paperwork provided by your insurance.
- Discuss the damage with the adjuster. Be thorough—you don't want to lose money because you overlooked a single room.
- Obtain repair estimates from contractors to assist you in negotiating a reasonable settlement.
- Gather your finances and begin the process of reconstructing your home.
Studying the terms of your homeowners insurance before disaster strikes is the simplest way to make sure your insurance claim process goes smoother. That way, you won't have to scramble to figure out what's covered and what isn't during a crisis.
MORE: Worst claim mistakes
How to save money on homeowners and car insurance
The majority of homeowners don’t compare quotes online before they renew their policy, and this means up to 83% of homeowners are overpaying for home insurance! A study by the Insurance Information Institute in 2016 shows only 17% of homeowners take these extra steps to secure better rates.
If you want to save money on your home insurance, but would rather leave the legwork of gathering quotes to someone else, then check out Jerry.
Your ultra-talented home and car insurance broker for life, the Jerry app gathers affordable quotes, helps you switch plans, and helps to cancel your old policy. Even better—Jerry will help you bundle your home and auto policies for maximum savings.
The best part? The average Jerry user saves $887 per year on their insurance; no missed savings here!
“Jerry was wonderful! I used it for my auto and renters policies. I trusted it so much that I signed up my homeowners insurance under Jerry as well. All of the agents are amazingly nice and knowledgeable.” —Mary Y.
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