New Mexico Workers’ Compensation Insurance

• Workers’ compensation insurance is required for all businesses in New Mexico with three or more employees.
• Business owners, part-time workers, seasonal and temporary workers are counted as employees, according to New Mexico workers’ compensation laws.
• Employers do not need to provide coverage for the following types of employees: Domestic servants, real estate salespeople, federal employees covered by the Federal Employees’ Compensation Act or other federal programs.
• If an employee is injured on the job, a New Mexico workers’ comp policy can help cover: emergency treatment, medical bills, lost wages and death benefits.

Workers’ compensation insurance is required for all businesses in New Mexico with three or more employees. 

Part-time, seasonal and temporary workers are all counted as employees according to New Mexico workers’ compensation laws. The coverage requirements also apply to agricultural employers and nonprofit, charitable and religious organizations.1

Businesses with less than three may consider skipping this coverage to save some money on insurance costs (also known as premiums). However, it’s important to remember that as an employer, you can still be held responsible for expenses if an employee gets hurt on the job.

In many cases, the cost of workmans’ compensation could be less than the potential out-of-pocket expenses for an employee injury. For example, an injured employee may file a liability lawsuit against an employer without any defined limits on the damage award.

If an employee is injured on the job, a New Mexico workers’ comp policy can help cover the following types of expenses:

• Emergency treatment
• Medical bills
• Lost wages
• Death benefits

Voluntary business owners coverage is also available for business owners who are interested in workers’ comp protections.

Who is exempt from Workers’ Compensation insurance in New Mexico?

There are a few exceptions to the state requirement for workers’ comp. New Mexico employers do not need to provide coverage for the following types of employees:

• Domestic servants
• Real estate salespeople
• Federal employees covered by the Federal Employees’ Compensation Act or other federal programs

Workers’ Compensation owner’s coverage

When determining the total number of employees a business has, the owner is included if they work in the business. Executive employees or sole proprietors may elect to opt out of coverage, but they are still counted when determining the number of workers for the business.

If you’re a sole proprietor who wishes to be exempt from the coverage requirements, you must have your exemption approved by the WCA Compliance Bureau.

Workers’ Compensation laws for construction workers

All construction workers must have coverage for workers’ compensation. New Mexico mandates this coverage in the construction industry regardless of the number of employees a business has.

Construction corporations, partnerships and LLCs must all have coverage, even if there is only one executive employee. Those who wish to minimize expenses for premiums may elect to forgo coverage for executive employees by filing an Executive Employee Affirmative Action Election form with their insurance carrier.

Self-insurance for New Mexico Workers’ Compensation

Employers who prefer to self-insure their business rather than obtaining coverage from an insurance carrier may apply to the WCA Compliance Bureau to receive written approval.

These employers may apply individually or as part of a group of employers in the same or similar industry.²

Requirements for self-insurance approval in New Mexico include:³

• Net worth of at least $2.5 million
• Been in business for at least three years
• Strong trend of financial health and solvency
• Risk management program in place
• Acceptable policy of excess insurance
• Approved letter of credit or surety bond
• Audited financial statements

How does Workers’ Comp work in New Mexico?

The expenses that accrue as a result of a work-related injury or illness are covered by NM workers’ comp. That includes the following costs:

• Medical care
• Travel costs
• Wage loss
• Permanent impairment
• Survivor benefits

For example, if an employee suffers a serious injury on the job, they would receive compensation for their medical bills and lost income during their recovery.

If their medical care required travel, they could also receive mileage reimbursement for travel 15 miles or more one way, hotel or lodging costs up to $85 and per diem for meals.⁴

Workers’ Comp income benefits in New Mexico

New Mexico offers the following types of indemnity benefits to compensate for wage loss and/or functional impairment:

Temporary total disability

The employee is unable to work temporarily due to their injury.

Temporary partial disability

The employee is still able to work in some capacity, but at a reduced wage or fewer hours per week.

Permanent total disability

The employee suffers a severe, permanent injury, such as total loss of use of both hands or eyes.

Scheduled injury

The employee suffers the loss of use of a specific body part.

Whole body impairment

The employee suffers an injury to the body, with benefits determined by their ability to return to work and other factors.

If an employee dies as a result of a work-related injury or illness, death or survivor benefits are paid to their dependents. Funeral benefits of up to $7,500 may be paid as well.⁵

Employer responsibilities for Workers’ Compensation insurance

In addition to obtaining the required workers’ comp insurance, New Mexico employers must do the following:⁶

• Pay a workers’ compensation assessment fee to the New Mexico Taxation and Revenue Department, which is $4.30 per employee per calendar quarter.
• Display the Workers’ Compensation Act poster in a conspicuous location where employees will have access to it.
• Provide Notice of Accident forms attached or adjacent to the Workers’ Compensation Act poster.
• Maintain a safe workplace and, if the employer’s workers’ comp insurance premium is $15,000 or more, comply with specific safety program requirements.

New Mexico Workers’ Compensation insurance reciprocity

Any employers with three or more employees and at least one of those employees working in New Mexico must carry workers’ comp insurance. This requirement applies whether the workers are residents or non-residents of New Mexico.

Additionally, all employees engaged in construction work in New Mexico must have coverage, even if the employer has fewer than three employees total.

If an out-of-state employer has an employee working in New Mexico, they can get an endorsement from their insurance carrier to cover accidents that occur within the state as long as that carrier is also licensed in New Mexico.

If that’s not an option, they must obtain a separate New Mexico policy.

It’s important to note that New Mexico workers’ comp requirements are not enforced on tribal lands within the state, although tribes may choose to enforce the requirement on a voluntary basis.

Businesses operating on a Native American reservation or pueblo must follow the guidelines of that tribe.

Are there penalties for not having Workers’ Comp coverage?

Employers can face penalties if they fail to comply with the state’s requirements for workers’ compensation insurance. Some examples include:

• Fines for failing to carry the required workers’ comp coverage
• Being forced to cease operations until coverage is obtained
• Fines for failing to comply with poster requirements in the workplace
• Civil penalties up to $10,000 for firing a worker or retaliating in any way due to a workers’ compensation claim being filed

What are the rates for Workers’ Compensation in New Mexico?

Insurance carriers look at a number of different factors when determining premium rates for each business, including:

• Risk of job-related injuries
• Total number of employees and payroll size
• Business location(s)
• History of past workers’ comp claims

How NEXT Insurance helps New Mexico businesses

NEXT Insurance makes it easy to get workers’ compensation insurance designed for small businesses and self-employed workers.

With our online services, it only takes about 10 minutes to get a quote, review coverage options, purchase insurance and have your certificate of insurance.

Start an instant quote online today.

Our team of licensed insurance advisors is standing by if you need any help finding the right coverage for your business.

¹ Determining Insurance Coverage

² Self Insurance

³ 11.4.8 Individual Self-Insurance

⁴ Medical Care

⁵ Indemnity Benefits

⁶ Employer Requirements