Anyone buying a home should purchase insurance in order to protect their investment. In fact, many banks which offer residential mortgages require that the homeowner also purchase insurance until he or she has paid back the mortgage.
In New Mexico, there are no state requirements about what should be covered by homeowner’s insurance. In fact, residents of New Mexico and those owning property in the state are not even required to have homeowner’s insurance on their home. Trying to self-insure, or going without homeowner’s insurance, however, can be very dangerous for New Mexico residents.
Due to its location just outside of Tornado Alley, New Mexico has a large number of tornados that cause millions of dollars in property damage every year. Unlike other natural disasters, there is very little warning given for tornados, making it next to impossible to prepare your home for possible damage. Eastern New Mexico’s location on a mesa makes it very vulnerable to large hail storms. A ten minute hail storm in Clovis, NM in 2010 caused over five million dollars in damage to over three thousand different structures. Within minutes, this hailstorm forced thousands of homeowners to replace the roofs on their houses and unattached buildings.
Homeowner’s insurance can provide coverage beyond repairing or replacing the structure of a house and the belongings inside it, however. Many homeowner policies also include liability coverage that can protect a homeowner in the case of a visitor injuring himself or herself on the homeowner’s property. A homeowner’s policy will provide some money for medical bills and other expenses in the case of an accident such as falling down the stairs.
Homeowner’s policies can also provide money to pay for living expenses in the case that the home is severely damaged. If a home becomes unlivable due to a natural disaster or an accident, many homeowner’s policies will provide money to the insured family or individual to obtain alternate housing (such as a rental home) until the structure can be fixed and made livable again. Having this protection is extremely important in New Mexico, where rental homes are very expensive.
Purchasing homeowner’s insurance is not required by New Mexico state law, but it is definitely a good idea for anyone who wants to protect their real estate investment and the livelihood of their family. Fortunately, policies in New Mexico are inexpensive compared to other areas of the country, making this a good choice for frugal families.
