The New Mexico Office of Superintendent of Insurance published a Bulletin on February 20, 2024 addressed to all insurance companies that have issued property insurance policies in the state. The Bulletin reminds insurers that all residential property insurance policies must provide coverage for the cost to repair or replace damaged property without deduction for depreciation, in accordance with New Mexico Statutes.
New Mexico Statutes Annotated 1978 59A-18-17 states, "Insurance coverage provided in residential property insurance policies shall provide coverage for the cost to repair or replace without deduction for depreciation. If the insured elects to effectuate repairs to the property by the insured's own self, a reasonable overhead expense shall be allowed."
The Office of Superintendent clarifies that the statute does not allow for an insurer to condition payment of the cost to repair or replace by requiring the work to be completed within a specific timeframe. The insurer paying actual cash value instead of replacement cost if the work is not completed within a certain timeframe is not allowed. Any insurer using forms that have a time limit for coverage must withdraw those forms and refile new forms that do not contain a time limitation for replacement cost within 90 days from the date of the Bulletin (2/20/24).
The Bulletin can be found here.
Ray Sugrim
Ray Sugrim is an Insurance Editor with FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. Ray is responsible for helping develop and edit content for subscribers. Ray is a St John’s University graduate with a degree in Risk Management & Insurance and is a CPCU candidate.