Insurance lifeline: Will the New Mexico Senate help Los Alamos homeowners keep their coverage?
Story by Stephanie Nakhleh
Photos by Minesh Bacrania
About a year ago, Los Alamos homeowner “T.P.” was dismayed to learn that her home insurance premium had nearly doubled from the previous year. After a decade with her original insurer and three years with Liberty Mutual, she began shopping for alternatives — only to find many companies wouldn’t insure her Los Alamos home at all.
“I was turned down by several insurers who told me they would not insure our area due to wildfire danger,” T.P. explained. “I would understand this attitude when building a new home in a hazardous area, but my home has been around for 30 years. This should be illegal.”
T.P.’s account was one of several collected by Boomtown through an online form inviting Los Alamos residents to share their insurance experiences. Some respondents, like T.P., requested to be identified by only their first name or initials when detailing their insurance struggles.
T.P. eventually found coverage through State Farm at about 60% of Liberty Mutual’s increased premium, but her story is becoming increasingly common in Los Alamos.
Fire protection by fire? The irony of the burn scar
Danielle Duran, intergovernmental affairs manager for Los Alamos County, testified at a recent Senate committee hearing that despite living in a burn scar, Los Alamos residents are still losing their coverage. “For the last five or more years, we have supported the idea of legislation that would effectively mitigate wildfire in our state,” she said. “Being the victim of many wildfires in the Jemez Mountains and having homes burned has meant that our last fire, the Cerro Pelado, was denied some fuel due to the severe burn scar that still exists in those mountains.”
This reduced fuel load should protect the community against risk, yet “we’ve had tens of community members who have already been dropped by their insurance companies,” she said, creating serious concerns for the local housing market.
When homeowners lose insurance coverage while carrying a mortgage, the consequences can be severe. Lenders typically require insurance to maintain a mortgage in good standing. Without it, homeowners may be considered in default or face expensive “force-placed” insurance policies chosen by the lender and charged to the homeowner.
Fighting fire with FAIR
Senate Bill 81, co-sponsored by Sen. Peter Wirth (D-Santa Fe) and Representatives Harlan Vincent (R-Ruidoso Downs) and Anita Gonzales (D-Las Vegas), aims to create a safety net for these homeowners by expanding New Mexico’s Fair Access to Insurance Requirements (FAIR) plan. The FAIR plan has existed since 1969 — but bill sponsors say its coverage limits are too low for today’s housing market.
“This bill increases the limits and gives the revised board for the FAIR plan the ability to cover up to $1 million for residential property and $5 million for commercial property,” Sen. Wirth explained during the Feb. 19 Senate Finance Committee hearing.
To qualify for FAIR plan coverage, homeowners must be rejected by at least three private insurers. The plan functions as the “insurer of last resort,” not a replacement for the private market.
“This is not a competition for the private market,” said Alice Kane, New Mexico superintendent of insurance, during the committee hearing. “It’s really just supposed to be a bridge until the private market comes here … We're not supposed to compete with the industry. You only get into this plan if you've been rejected by the industry.”
Unlike standard policies, the FAIR plan coverage will likely come with higher premiums and stringent mitigation requirements. According to testimony at the hearing, mitigation efforts like creating defensible space, installing ember-resistant vents, and upgrading to Class A roofing materials could cost homeowners as much as $7,000.
Christian Myers, chief actuary for the Office of Superintendent of Insurance, told the committee that FAIR plan rates will be “actuarially sound,” meaning they will collect enough premiums to cover the risk. While some homeowners may experience sticker shock, premiums will reflect the “actuarially appropriate price” of insuring properties in fire-prone areas, he said.
The next steps for the legislation are uncertain. The bill passed the Senate Tax, Business and Transportation Committee in January, and the Senate Finance Committee on Feb. 19, advancing to the Senate floor, where it joins a long list of bills waiting to be heard. Meanwhile, the existing FAIR plan board was scheduled to meet Feb. 20 to debate increasing coverage limits on their own initiative.
“The fox in charge of the chicken coop”
A point of contention in the Senate Finance Committee discussion was the current structure of the FAIR plan board, which consists entirely of insurance industry representatives. Committee Chair George Muñoz questioned whether this arrangement represents a conflict of interest. “That's the fox in charge of the chicken coop, right?” Muñoz asked during the hearing. “How many chickens are we going to let out to get eaten today?”
The proposed legislation would restructure the board to include climate scientists, consumer advocates, and other experts alongside industry representatives.
Multiple calls from Boomtown to Sen. Leo Jaramillo, who serves Northern New Mexico including parts of Los Alamos County, went unreturned. Jaramillo initially voted against the bill in committee, citing concerns about the impact on low-income residents, but indicated he might change his vote on the Senate floor.
Similarly, as of this writing, none of a half-dozen insurance agents serving Los Alamos had returned calls or responded to messages seeking comment on the legislation and local insurance market conditions. However, Jason Pike, a mortgage lender in Los Alamos, offered some perspective.
“In Los Alamos, I find insurance to be pretty reasonable,” Pike said. “State Farm has been pretty liberal [with insuring homeowners]. I just worked with a customer who had a big, giant tree growing out of his deck, hanging over his house. They told him to trim the branches and clear the needles underneath, and they still insured him.”
What to do when it happens to you
Pike said that in his experience, insurance companies appear most concerned about older neighborhoods with mature trees surrounding homes, which he believes may explain why some areas of Los Alamos are experiencing more non-renewals than others.
During testimony at the Senate hearing, lawmakers said that insurance companies use remote technology to evaluate vegetation surrounding homes, often making coverage decisions based on these distant assessments without conducting in-person inspections. “Insurance agencies look at satellite images to gauge fuel load and reject you for that reason,” Rep. Vincent said during the debate. Any vegetation visible from above may be deemed too risky to be allowed near a home — regardless of other factors, such as being located in a low-fuel burn scar.
For Los Alamos homeowners worried about their insurance, experts recommend several steps:
Document any rejection letters from insurance companies, as these will be needed to qualify for the FAIR plan if SB81 passes.
Begin mitigation efforts around your property. Clear vegetation within 15 feet of your home, remove branches overhanging your roof, and install ember-resistant vents.
Shop extensively for new coverage if you receive a non-renewal notice. Even USAA, which Pike described as “really picky,” recently offered surprisingly affordable coverage for a home in White Rock’s Mirador development, he said.
Understand that premiums may vary dramatically even between similar properties. Pike mentioned seeing premiums ranging from $650 to $8,000 annually, depending on location and other risk factors.
The original bill included a provision for $50 million in funding, allocating about $9 million for mitigation grants to help homeowners afford the estimated high cost of hardening their homes against wildfire, with the remainder serving as a financial backstop for the FAIR plan in case of catastrophic losses. However, that appropriation was stripped during the Senate Finance Committee meeting. Committee members argued that such funding would likely be handled separately in the state budget bill (House Bill 2).
For Los Alamos homeowners like T.P., the legislation offers a possible safety net in an increasingly unstable insurance market. While the FAIR plan won’t offer the most affordable coverage, it could mean the difference between keeping their homes and facing impossible financial decisions if private insurers continue to retreat from wildfire-prone areas.
“This is a crisis that all of us in this state are going to face,” said Sen. Wirth. “When these insurance companies start pulling out, and there’s not a plan like this as a backup — again, we’ve got constituents who are in a place where they can’t sell their homes. They can’t get financing on their homes. They can’t rebuild their homes.”
To track the bill’s progress as it awaits consideration on the Senate floor, visit the Senate Floor Calendar on the state website and search for SB 81.
Boomtown will continue investigating this evolving story. We're reaching out to insurance companies, legislators, and other key decision-makers to provide ongoing coverage of this issue affecting so many Los Alamos homeowners. If you've received a non-renewal notice or experienced significant premium increases, please share your story through our online form. Your experiences help us track the extent of this problem and identify solutions.