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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 non-profit, charitable and religious organizations.1
Businesses with two or less employees may be inclined to skip this coverage in order to save some money on insurance 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 most cases, the cost of workmans’ compensation insurance is far less than the potential out-of-pocket expenses for an injury. For example, an injured employee may file a tort liability lawsuit against an employer without any defined limits on the damage award.
If you or an employee is injured on the job, a New Mexico workers’ comp policy can help cover the following types of expenses:
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:
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.
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.
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
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:
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
New Mexico offers the following types of indemnity benefits to compensate for wage loss and/or functional impairment:
The employee is unable to work temporarily due to their injury.
The employee is still able to work in some capacity, but at a reduced wage or fewer hours per week.
The employee suffers a severe, permanent injury, such as total loss of use of both hands or eyes.
The employee suffers the loss of use of a specific body part.
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
In addition to obtaining the required workers’ comp insurance, New Mexico employers must do the following:6
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.
Employers can face penalties if they fail to comply with the state’s requirements for workers’ compensation insurance. Some examples include:
Insurance carriers look at a number of different factors when determining premium rates for each business, including:
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.
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Workers’ compensation insurance helps to protect your business, but it’s only one of several types of insurance you’ll need for all the risks you face every day as an employer.
Most New Mexico businesses also consider these options:
General liability insurance protects your business if certain types of mistakes or accidents occur, such as customer injury or damages to someone’s property.
Professional liability insurance provides financial protection against claims of professional mistakes and negligence.
Commercial auto insurance protects your business from unexpected expenses if you are involved in an accident. This coverage is needed for business-owned vehicles as well as personal vehicles used for work purposes.