All the smoke and fire year after year contributes to New Mexico having the 13th highest home insurance rates in the nation, a new study by QuoteWizard shows.
The other 12 are all in Tornado Alley, or main hurricane territory.
“This is directly related to forest fires [in New Mexico]” said Nick VinZant, senior analyst at QuoteWizard, an online insurance comparison platform.
Everything has been much more expensive everywhere in the past year – except for home insurance. Some places are right in line with “more expensive” home insurance, like New Mexico, but QuoteWizard determined that 17 states have lower home insurance rates in 2022 compared to 2021.
“Home insurance has become location specific,” VinZant said.
The highest home insurance rates are in neighboring Oklahoma and Texas and nearby Kansas and Nebraska, all averaging over $3,000 a year. QuoteWizard estimated New Mexico’s average at $2,071 for 2022, a 13 percent increase over 2021 — the fifth-highest percentage increase behind Idaho, South Carolina, Missouri and Kansas.
VinZant also found that New Mexico has the eighth-largest spread between the cheapest policy at $1,600 and the most expensive at $3,100 for a given policy.
“We see a huge range in price for the exact same coverage,” VinZant said. “It pays to shop around.”
Jerry Gomez didn’t think he would spend time on such things. But that was before the Hermits Peak/Calf Canyon fire destroyed his 2,400-square-foot home he built 20 years ago in Rosiada, 20 miles north of Las Vegas, New Mexico
Gomez paid $3,300 for $250,000 in coverage.
Gomez is now building a smaller 720-square-foot house to last until he can rebuild a larger home. He expects a full restoration to cost $550,000.
“I’m not going to get what I lost because I didn’t have replacement costs,” Gomez said. “A lot of times we don’t pay attention. I didn’t know half of this stuff. This is one of those things. i blame myself If the government comes and helps us, I think we will be fine.”
The Hermits Peak/Calf Canyon fire was just the continuation of decades of devastating fires in New Mexico. VinZant said New Mexico has seen a 163 percent increase in natural disasters over the past 20 years and 10 cases of more than $1 billion in wildfire losses over the past 40 years.
“Now New Mexico is starting to increase at a faster rate than other states,” VanZint said.
And these increases are felt even in areas that don’t face the forest.
Berta Salazar’s annual home insurance premium has risen from $1,085 to $1,300 over the past three years as the assessment of her two-story, three-bedroom, two-bath, 2,059-square-foot house in Santa Fe rose from $229,000 to $465,000 .
She remembers six years ago her home insurance was only $700 a year ago, but she didn’t realize she was underinsured with a $150,000 policy.
“At the time, the insurance company didn’t explain to me that I had to have enough insurance,” Salazar said.
But experts say wildfires are a key component of home insurance, especially in Santa Fe.
CoreLogic in 2019 ranked Santa Fe No. 12 among the 15 largest metropolitan areas for wildfire risk based on reconstruction costs. Eight of the top nine were in California with Denver; Colorado Springs, Colorado; and San Antonio, Texas, the only other cities before Santa Fe.
Headwaters Economics, based in Bozeman, Montana, found in a July report on wood roofs in wildfire-prone areas that Santa Fe County’s wildfire risk is greater than 90 percent of U.S. counties. But Santa Fe County and Northern New Mexico did not make the nonprofit’s list of moderate to very high wildfire risk counties with plenty of wood roofs like San Juan, Grant, Doña Ana, Otero and Chavez counties.
The casual observer would think that wildland fires are limited to neighborhoods in the foothills—and indeed, the Santa Fe Fire Department rates them as extreme and very high wildland fire risk, in part because they often have only one entrance and one exit for traffic and fire trucks. The town center is not rated, but is also vulnerable because all the lots and undeveloped properties are flooded with flammable vegetation, said Nathan Miller, a wildland supervisor with the Santa Fe Fire Department.
“The whole city of Santa Fe is one wild urban interface,” Miller said. “All Santa Fe citizens should be vigilant about wildfires.”
Vigilance means clearing vegetation within 30 feet of homes, keeping shrubs and trees trimmed “and keeping anything from going over the houses,” Miller said.
The Marshall Fire in Colorado on December 30, 2021 was chilling proof that communities don’t need to be in forests or on hills to burn quickly. Boulder’s suburbs of Louisville and Superior are flat grassland towns. In just 24 hours, the most destructive wildfire in Colorado history destroyed or damaged more than 1,000 homes and more than 30 commercial structures there.
“In New Mexico, you can’t buy a policy for cash value,” said Carol Walker, executive director of the Rocky Mountain Insurance Association. “You can only purchase a replacement cost policy.”
Construction spending has increased about 17 percent in the past year and about 26 percent in the previous year, according to the Associated General Contractors of America. The U.S. Census Bureau reports a nearly 50 percent increase in construction spending since 2016, from about $1.2 billion to $1.8 billion.
Wildfire isn’t the only destroyer of homes in New Mexico, Walker noted.
“New Mexico is a hail prone state,” she said. “Hail can cause more damage than wildfire.”
Home insurance is not regulated by the state, nor is health insurance.
“It’s a competitive market,” said Jennifer Katechis, deputy chief of the New Mexico Office of the Insurance Superintendent, a state agency. “We don’t set their rates. We can check with insurers to make sure they are honoring policies accurately. It is an intermediary between the insurer and the insured.”
The agency’s typical involvement with home insurance companies follows consumer complaints filed with the office.
“There is no significant jump [in complaints]Catechis said.
What there has been is some denial of coverage in foothill communities. But Catechis and Walker insist coverage is available everywhere in Santa Fe.
“New Mexico is not in the same boat as California yet,” Walker said. “It’s still widely available in New Mexico. There may need to be wildfire mitigation requirements to get insurance. You may have to shop it around. You will probably pay more for it.
“Somebody didn’t shop around,” Catechis said of the hypothetical of not finding insurance in Santa Fe. “Another insurer would write a policy. Users can try to do a little shopping. See if another insurer will cover them. If they can’t get coverage, they can turn to New Mexico [Fair Access to Insurance Program]. The stipulation is that FAIR will not write a policy over $250,000.”
FAIR was enacted by the Legislature in 1969 to provide property insurance to property owners who could not secure policies in the normal market. FAIR is underwritten by the New Mexico Property Insurance Program.
Home insurance can come with “sticker shock,” but Walker tries to put policy costs into context.
“Insurance is not a huge part of buying a home,” she said.