New Mexico has one of the worst uninsured-driver problems in the country. In 2023 the Insurance Research Council estimated that 24.1% of New Mexico drivers carried no insurance at all, the second-highest rate in the nation behind Mississippi and far above the 15.4% national figure.1 The coverage that protects you when one of those drivers hits you, uninsured and underinsured motorist coverage (UM/UIM), matters more here than in most places.
New Mexico's rules on it are specific, and a couple of them can quietly cost you money if you buy the wrong version. Here's what actually applies.
Your insurer must offer it, but you can still turn it down
Every auto liability policy issued in New Mexico has to include UM/UIM coverage, at the same limits as your liability coverage, unless you reject it in writing.2 That requirement has been in force since January 1, 1980.2
What counts as a valid rejection is where insurers used to cut corners, so the New Mexico Supreme Court set firm rules in Jordan v. Allstate. An insurer has to offer UM/UIM equal to your liability limits, give you the premium cost for each level so you can make an informed choice, and write any rejection into the policy itself.3 If it skipped those steps, the rejection is invalid, and you may actually carry UM/UIM coverage the insurer treated as waived.
Lawmakers tried to go further in 2025. House Bill 97 would have made UM/UIM automatic and much harder to waive. It died in committee.4 So the reject-it-in-writing rule is still current law in 2026.
The offset trap and "illusory" minimum-limits coverage
This is the New Mexico rule that catches people off guard.
Underinsured coverage here does not add on top of the at-fault driver's insurance. It fills the gap between what that driver carried and your own UIM limit. The Supreme Court adopted this "offset" method in Schmick v. State Farm.5 An example: your UIM limit is $100,000, and the driver who hit you had $25,000 in liability coverage. Your UIM pays the $75,000 difference, not a fresh $100,000.
Run that same math at the statutory minimum and it falls apart. New Mexico's minimum limits are $25,000 per person, $50,000 per accident, and $10,000 for property damage, usually written 25/50/10.6 If your UIM limit is the minimum $25,000 and the driver who hit you also carried the $25,000 minimum, the offset is $25,000 minus $25,000. You collect nothing, even though you paid for underinsured coverage.
The Supreme Court addressed this head-on in Crutcher v. Liberty Mutual in 2022. It held that minimum-limits UIM is "illusory," because the offset cancels it out against another minimum-limits driver, and ruled that insurers can keep charging for it only if they hand the buyer a plain-language disclosure stating they will never receive an underinsured benefit.7 The Court later confirmed that Crutcher reaches policies sold before the 2022 decision, which opened the door to premium refunds for drivers who were charged for coverage that could never pay.8 If you have ever carried minimum-limits UM/UIM in New Mexico, that history is worth a look.
The upshot is simple. Buy UM/UIM above the state minimum. It's the only version that does what buyers assume it does.
Stacking is allowed by default
If you pay separate premiums to insure more than one vehicle, New Mexico generally lets you stack UM/UIM limits, adding them together across your cars or policies. Schmick let an insured combine two policies before applying the offset.5 An insurer can limit stacking, but only carefully. In Montano v. Allstate Indemnity, the Court required an explicit written rejection of stacking, and held that when a policy charges multiple premiums for multiple vehicles, stacking is required even if the anti-stacking language is clear.9 A single, clearly disclosed premium with unambiguous language is the only way an insurer avoids it.9 Count how many premiums you're paying before you assume one limit is all you have.
Property damage and your car
UM coverage can pay for damage to your vehicle from an uninsured driver, but the policy is allowed to exclude the first $250 of property loss per accident, which works like a deductible.2 That exclusion has nothing to do with your injury claim. And if your car is worth less on resale after the repair, that's a separate diminished value claim with its own New Mexico rules, covered here: diminished value in New Mexico.
Two deadlines, and they aren't the same
Two clocks start after a crash, and mixing them up is a common way to lose a claim.
Your claim against the at-fault driver is a personal injury claim. The deadline is three years from the date of the crash.10
Your UM/UIM claim is a different animal. It's a claim against your own insurer under your policy, so it runs on New Mexico's six-year limit for written contracts.11 In Whelan v. State Farm, the Supreme Court held that this six-year clock does not start on the crash date. It starts when the insurer breaches the contract, meaning when it denies or fails to pay. The Court also struck down a policy clause that tried to force any lawsuit within six years of the accident; the clause was unreasonable and unenforceable.12 That protects you, but don't rely on it. Your three-year deadline against the driver keeps running, and those claims often have to be resolved first. Tell your insurer early.
If you need the official police report to support a claim, you can request New Mexico crash reports here: New Mexico crash reports.
What this means for New Mexico drivers
New Mexico is an at-fault state with pure comparative negligence and no PIP or no-fault system, so you recover from whoever caused the crash, reduced by your own share of fault.13 When that driver has no insurance or too little, UM/UIM is the coverage that fills in. With close to a quarter of the state's drivers uninsured, carrying it at real limits rather than the minimum is the most useful single step most drivers here can take.1
When a UM/UIM claim gets denied or lowballed, it's a contract dispute, and the case law here (Jordan, Crutcher, Montano, and Whelan) runs in the policyholder's favor. A local attorney can tell you quickly whether your rejection or your limits hold up. You can find one through the legal directory.
This is general information about New Mexico law, not legal advice.
Sources
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Insurance Research Council, uninsured-motorist estimates (2023). https://insurance-research.org/news/one-three-drivers-are-either-uninsured-or-underinsured-us-exposing-themselves-and-other
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NMSA 1978 § 66-5-301 (insurance against uninsured and unknown motorists; rejection of coverage by the insured). https://law.justia.com/codes/new-mexico/chapter-66/article-5/part-4/section-66-5-301/
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Jordan v. Allstate Ins. Co., 2010-NMSC-051, 245 P.3d 1214. https://law.justia.com/cases/new-mexico/supreme-court/2010/677.html
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New Mexico Legislature, House Bill 97, 2025 Regular Session (postponed indefinitely in committee). https://www.nmlegis.gov/Legislation/Legislation?chamber=H&legType=B&legNo=97&year=25
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Schmick v. State Farm Mut. Auto. Ins. Co., 1985-NMSC-073, 103 N.M. 216, 704 P.2d 1092. https://law.justia.com/cases/new-mexico/supreme-court/1985/15459-0.html
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NMSA 1978 § 66-5-215 (required minimum liability limits). https://law.justia.com/codes/new-mexico/chapter-66/article-5/part-3/section-66-5-215/
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Crutcher v. Liberty Mut. Ins. Co., 2022-NMSC-001, 501 P.3d 433. https://www.courtlistener.com/docket/6661313/crutcher-v-liberty-mutual-insurance-company/
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New Mexico Courts, "N.M. Supreme Court rules that insurance case decision applies to older policies" (Oct. 2024). https://nmcourts.gov/wp-content/uploads/2024/10/NM-Supreme-Court-rules-that-insurance-case-decision-applies-to-older-policies.pdf
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Montano v. Allstate Indem. Co., 2004-NMSC-020. https://law.justia.com/cases/new-mexico/supreme-court/2004/8f11.html
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NMSA 1978 § 37-1-8 (personal injury; three-year limitation period). https://law.justia.com/codes/new-mexico/chapter-37/article-1/section-37-1-8/
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NMSA 1978 § 37-1-3 (written contracts; six-year limitation period). https://law.justia.com/codes/new-mexico/chapter-37/article-1/section-37-1-3/
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Whelan v. State Farm Mut. Auto. Ins. Co., 2014-NMSC-021. https://law.justia.com/cases/new-mexico/supreme-court/2014/34-280.html
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New Mexico Motor Vehicle Division, "What automobile insurance am I required to have in New Mexico?" https://www.mvd.newmexico.gov/what-automobile-insurance-am-i-required-to-have-in-new-mexico/