You must prove that you’re financially responsible―capable of financially taking care of an accident―before you can take a car out on state roads.

Ways to Establish Financial Responsibility

You can establish your financial responsibility in one of two ways:

• Leave $60,000 with the state treasurer’s office in the form of cash or a surety bond.

• Buy automobile liability insurance. This is what most people choose.

New Mexico Liability Insurance Requirements for Private Passenger Vehicles

When you buy insurance, you can’t simply buy a small amount. The state requires at least:

• $20,000 for bodily injury or death of one person

• $50,000 per accident for bodily injury to or death of two or more people

• $10,000 per accident for property damage

Other types of coverage are also available, such as collision and uninsured motorist insurance. Because the Insurance Information Institute (III) says that New Mexico has the highest number of uninsured motorists in the country, at a whopping 29 percent, you might want to pay special attention to the uninsured motorist insurance.

Even if you are insured, the minimum amounts won’t always be enough. If, for instance, you accidentally run a red light and hit a motorcyclist, causing $100,000 in bills, and you only have $20,000 of insurance, the motorcyclist could sue you for the extra $80,000. If you don’t have it, you might have to sell your house and other assets to come up with the cash.

Everyone’s premiums vary according to factors like the type and year of the vehicle; owner's and driver's age; and how long the policyholder has been with the insurers. Shop around and get some comparisons before you decide on one company.

Proof of Insurance and Financial Responsibility

After you buy insurance and register your car, you’ll need to carry proof of insurance or the deposit with you at all times.

The insurance company will give you an insurance card that has your policy number, vehicle information, and name on it. You need to have this in case you are in an accident or if a police officer asks to see your proof of insurance.

Penalties for Failure to Maintain Financial Responsibility

Having no proof of insurance results in several penalties:

• If a police officer stops you and you simply don’t have the proof with you, bring proof that you had valid insurance on the day of the traffic stop.

• If you are truly driving around without insurance, you face misdemeanor or other criminal charges, fines of $300 or more, and losing vehicle registration.

Monitoring Drivers

Using the New Mexico Insurance Identification Database (IIDB), insurance companies notify the state whether or not you have insurance. If you let insurance drop, the company will input this into the database.

If the state gets a notice that you dropped your insurance, the state will send you a letter telling you that you need to get insurance or provide them with proof that you already have insurance.