Public liability fund; municipal public liability fund; local public body participation; educational entity participation
NMSA 1978, § 41-4-25
in effect41-4-25. Public liability fund; municipal public liability fund; local public body participation; educational entity participation
A. Except as provided in Subsections B and C of this section, local public bodies shall obtain coverage for all risks for which immunity has been waived under the Tort Claims Act pursuant to Sections 41-4-9, 41-4-10 and 41-4-12 NMSA 1978 through the public liability fund by paying into the fund an assessment, to be determined by the director of the risk management division, which shall be based on the risks to be insured. In addition, any local public body upon application to the risk management division may obtain coverage for any risk for which immunity has been waived under the Tort Claims Act through the public liability fund if the director of the risk management division determines that:
(1) the risk is, in fact, commercially uninsurable or insurable only at a cost or subject to conditions which the director deems unreasonable. To make this determination, the director may require the local public body to submit such information as he deems appropriate and may also seek information from any other source; and
(2) the local public body has paid all insurance premiums and public liability fund assessments in a timely manner or has had good cause for failing to do so. The local public body shall pay for coverage of uninsurable risks by paying into the fund an assessment, to be determined by the director, which shall be based on risks to be insured. However, payment of all or part of any such assessment may be deferred or postponed without penalty until future years if the local public body certifies to the director's satisfaction that it has insufficient funds available to pay all or a part of any assessment. A municipality or county shall be deemed to have insufficient funds only if it is, in the current fiscal year, levying the full property tax millage allotted it under law and, in addition, has levied during the current fiscal year a five-mill levy above the constitutional twenty-mill limit to pay tort judgments. Any deferred or postponed assessment is payable in any succeeding fiscal year, subject to the same limitations on duty to pay, until paid in full.
B. A municipality which has adopted a charter pursuant to Article 10, Section 6 of the constitution of New Mexico may, by ordinance of the governing body, elect to create a "municipal public liability fund" to insure or otherwise cover any risk for which immunity has been waived under the Tort Claims Act. A municipal public liability fund created pursuant to this subsection shall provide that:
(1) the fund and any income from the fund shall be held in trust, deposited in a segregated account and invested in accordance with law;
(2) any money deposited in the fund may only be expended to purchase liability insurance; to contract with one or more consulting or claims adjusting firms; to defend, save harmless and indemnify any employee of the municipality for any liability covered by the municipal public liability fund; to contract with one or more attorneys or law firms on a per-hour basis to defend tort liability claims against the municipality and its officers and employees acting within the scope of their duties; and to create a retention fund adequate to cover all uninsured risks of the municipality;
(3) if the municipal public liability fund will be exhausted by the payment of all judgments and claims allowed during a particular fiscal year, amounts paid to each claimant or person obtaining a judgment shall be prorated, with each person receiving an amount equal to the percentage his own payment bears to the total of claims and judgments outstanding and payable from the fund. Any amounts due and unpaid as a result of such proration shall be paid in the following fiscal year;
(4) no tort, civil rights or workers' compensation judgment shall be paid by a tax levy upon real or personal property unless the judgment exceeds one hundred thousand dollars ($100,000). The tax levy shall be made only on that portion of the judgment which is in excess of one hundred thousand dollars ($100,000). Judgments arising out of a single occurrence shall be paid by tax levies for the portions of the judgments in excess of one hundred thousand dollars ($100,000);
(5) the governing body shall review all judgments set forth in Paragraph (4) of this subsection prior to transmitting them to the county assessor for inclusion in the property tax assessment. The review by the governing body shall include a finding by the governing body that the judgment properly arose under the Workers' Compensation Act [Chapter 52, Article 1 NMSA 1978] or under the Tort Claims Act. After so finding, the governing body shall by resolution direct the county assessor to provide an assessment as required; and
(6) the ordinance shall not become effective until the department of finance and administration and the general services department have reviewed and approved the ordinance as complying with all of the provisions of this subsection.
C. A local public body, other than one that has adopted a charter pursuant to Article 10, Section 6 of the constitution of New Mexico, may elect to obtain coverage from the public liability fund in accordance with Subsection A of this section or may:
(1) purchase commercial insurance coverage for the risks for which immunity is waived under the Tort Claims Act; or
(2) obtain coverage for the risks for which immunity is waived under the Tort Claims Act in accordance with the provisions of Chapter 3, Article 62 NMSA 1978.
D. The risk management division may assess any local public body with a risk covered by the public liability fund:
(1) a penalty in a percentage or minimum amount to be fixed by the director of the risk management division, with the advice of the board, for the failure to make timely payment of any assessment of the division; or
(2) a surcharge not exceeding seventy-five percent of the rate established by the division for coverage under the public liability fund, if:
(a) the local public body fails to meet any of the underwriting standards or claims procedures prescribed by regulations of the division; or
(b) the local public body fails to carry out any safety program prescribed by regulations of the division.
E. Any school district as defined in Section 22-1-2 NMSA 1978 or educational institution established pursuant to Chapter 21, Article 13, 16 or 17 NMSA 1978 may, upon application to and acceptance by the risk management division, purchase, if the coverage is commercially unavailable, any coverage offered by the division, through the public liability fund, including school bus coverage for school bus contractors, notwithstanding the limitation in Subsection E of Section 41-4-3 NMSA 1978; except that coverage other than for risks for which immunity has been waived pursuant to Sections 41-4-9, 41-4-10, 41-4-12 and 41-4-28 NMSA 1978 shall be provided to a school district only through the public school group insurance authority or its successor, unless the district has been granted a waiver by the authority or the authority is not offering the coverage for the fiscal year for which the division offers its coverage. A local school district to which the division may provide coverage may provide for marketing and servicing to be done by licensed insurance agents who shall receive reasonable compensation for their services.
F. If any local public body fails to insure or otherwise cover any risk, the immunity for which has been waived under the provisions of the Tort Claims Act, any resident of the local public body shall have standing to bring suit to compel compliance with the provisions of the Tort Claims Act. Nothing in this section shall be construed to allow any recovery against any governmental entity for any damages resulting from the failure of the governmental entity to insure or otherwise cover any risk.
G. Nothing in this section shall be construed as requiring the risk management division to provide coverage to any local public body, except coverage for those risks for which immunity has been waived under Sections 41-4-9, 41-4-10 and 41-4-12 NMSA 1978, or as requiring the division to provide coverage on terms deemed to be unreasonable by the director of the division.
1953 Comp., § 5-14-20.3, enacted by Laws 1977, ch. 386, § 19; 1978, ch. 166, § 5; 1979, ch. 10, § 1; 1979, ch. 392, § 3; 1983, ch. 301, § 76; 1986, ch. 27, § 1; 1986, ch. 102, § 9; 1988, ch. 57, § 1; 1989, ch. 372, § 1.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18541/index.do#!b/41-4-25Fetched: 10/20/2026