Before you take your car out on the roads in the state of New Mexico, you must prove to the authorities that you have the financial capability to cover costs of all damages if you are involved in an accident.

To establish your financial responsibility, you can deposit a lump sum of $60,000 in the state treasurer's office in the form of a surety bond or cash. The other more popular and cheaper method of securing financial responsibility is to buy car liability insurance.

The state of New Mexico requires you to buy a minimum bodily injury liability of $25,000 per person per accident and up to $50,000 for injuries of all people in an accident. The property damage liability is set at a minimum amount of $10,000 per accident. This mandatory coverage plan is referred to as 25/50/10 coverage.

For more information on New Mexico consumers can contact the New Mexico Public Regulation Commission in Santa Fe by calling 1-888-4ASK-PRC or by visiting their web site at: http://www.nmprc.state.nm.us/.

The state follows a tort system, which means that one of the parties involved in the accident is guilty of causing it. The person responsible for the accident and his/her insurance company has to pay up all the money to cover costs of bodily injuries, property damage and any other damages covered in the policy document.

If you are held responsible for causing the accident, the victim has a right to sue you. In such a case, the minimum insurance cover may not cover all costs. Therefore, it is better to have an insurance coverage that is more than the minimum set by the authorities.

29 % of all motorists in New Mexico are uninsured. This is the highest ratio of any state in the country. Thus, getting coverage against uninsured and underinsured motorists is a highly recommended.

The insurance companies in the state monitor the drivers using the New Mexico Insurance Identification Database and report any irregularities in the insurance to the state authorities.

If you drive around the state without valid car insurance, you could face misdemeanor charges, a fine of up to $300 and the cancellation of your vehicle registration.

The average car insurance premium rate in the state is $1,939 in 2009. Car insurance is mandatory and it does not come cheap. However, this does not mean that you should pay more than what is required. Before you buy a car insurance policy, don't forget to shop around and compare the quotes offered by various companies.