New Mexico's insurer of last resort now writes $2 million — and still cannot satisfy your declaration
New Mexico's insurer of last resort now writes $2 million — and still cannot satisfy your declaration
2026-09-15 · New Mexico · Regulation
The New Mexico FAIR Plan is a far more plausible backstop for an association than it was two years ago. It still cannot do two of the things a typical New Mexico declaration requires a board to do.1
The limits went up twice
Office of Superintendent of Insurance Bulletin 2025-004, issued July 7, 2025 under the authority of Section 59A-29-5 NMSA 1978, set the New Mexico Property Insurance Program's maximum liability limits for “one, two, three, and four-family dwellings” at $750,000 in protected fire districts (Classes 1–7) and $500,000 in unprotected districts (Classes 8–10). The residential maximum had been $350,000.
Then, on October 15, 2025, OSI announced that “coverages for commercial properties under the New Mexico Fair Access to Insurance Requirements (FAIR) Plan have increased from $1 million to $2 million,” which “will help better serve the more than 7,200 residents and 280 business enrolled in the FAIR Plan, as well as future enrollees.”
There is a detail in Bulletin 2025-004 worth knowing in advance: during a Governor's executive emergency order declaring a Catastrophe, the same limits apply but are calculated by zip code rather than by fire division.
What the regulator's own guide says the policy is not
OSI published a FAIR Plan Consumer Guide in February 2026. Three of its statements are the ones an association board needs, and they are not caveats — they are the shape of the product:
The plan provides “Basic property coverage when you cannot get coverage in the normal market.” Coverage is written on “Value (not replacement cost)” — “coverage is based on actual cash value.” And the plan “does not offer premises liability and liability cannot be added to the policy.”
Why that breaks a standard declaration
Most New Mexico declarations impose two insurance duties on the board: insure the common elements or the building at replacement cost, and carry general liability coverage for the association.
A FAIR Plan policy alone satisfies neither. It pays actual cash value, which is replacement cost minus depreciation — the gap on an older New Mexico building with an aged roof is substantial. And it carries no premises liability at all, with no option to add it.
An association that moves to the FAIR Plan because nothing else will write it can therefore be insured and simultaneously in breach of its own governing documents. The practical response is a separate liability tower placed alongside the FAIR Plan property policy, and a documented board decision recording why the association is where it is. That is a conversation to have with counsel and a broker before the switch, not after a claim.
The access rules, which catch boards out
The Consumer Guide records three procedural requirements. “All new business applications must be submitted by a licensed producer” — a board cannot apply directly. The producer must sign an affidavit “at application and again at renewal” confirming a declination from the voluntary market. And during an active wildfire, applications are suspended: “Once the fire is at least 90% contained, the application may be re-[submitted].”
That last rule is the one to plan around. An association cannot buy its way out of a fire that has already started, which means the FAIR Plan is a decision made in a quiet month, not an emergency measure.
One further definition matters to associations with unsold or unoccupied units: the guide's vacancy provisions reach “buildings with no tenant for more than 60 days.”
The market that is pushing associations here
OSI's own July 2025 release put the scale of the problem in the state's numbers: “over 10,000 homeowners non-renewals in New Mexico from the top 10 insurers” between January 1, 2021 and July 1, 2024, and “13 percent of New Mexico properties are uninsured. This is the second highest rate in the country behind Mississippi.”
The same release notes “the $10 million in grants currently available to help people mitigate their homes.” That money is worth a board's attention for a reason specific to associations: the mitigation items it funds — clearing trees near structures, vent screening, more flame-resistant roofing — are largely common-element work the association controls, not individual-owner work. An association is often the only party able to do the mitigation that would improve every owner's insurability.
What a board faces before renewal season
Get a licensed producer engaged early enough to document a voluntary-market declination, because the affidavit is required at application and again at renewal. Read the declaration's insurance article and identify exactly which obligations a FAIR Plan policy would not meet. Price a separate liability policy. And pursue the mitigation grant money on the common elements, since that is the only lever that changes the underwriting rather than the paperwork.
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