New Mexico Supreme Court Reviews Changes in Uninsured/Underinsured Motorist Coverage

The New Mexico Supreme Court issued a decision this month that reviewed the changes made to the UM/UIM coverage requirements and assessed whether they applied to claims and contracts that pre-date the law. In Montaño v. Allstate Indemnity Co., the Supreme Court changed the law to protect the rights of the insured. Now, if an insurance company wants to limit its liability, the carrier must provide the insured an opportunity to reject the coverage in writing after reviewing the entire policy. Another case, Jordan v. Allstate Ins. Co., which held that UM/UIM coverage rejection must be provided in writing to the insured, arrived soon after the holding in Montaño, and in that case the court declined to limit the application of the ruling to future cases.

The plaintiff in the recently released decision, Whelan v. State Farm Insurance Co., was the owner of a car involved in an accident with his father in 2002 that eventually led to his death in 2004. The owner of the car and insurance policy did not have UM/UIM coverage, but he was insured under a $50,000 liability policy. Since he did not have UM/UIM coverage, he was only able to recover the amount carried by the at-fault driver, which was $25,000 worth of insurance. After the ruling made in Jordan in 2010, the driver demanded $25,000 to equalize the UM/UIM total of $50,000. The insurance company declined to extend and back date the coverage, citing a limitations provision in the policy that barred recovery unless civil ligation commenced within six years after the date of the accident.

The insured man filed for a declaratory judgment against the insurance company to follow the holdings of Jordan and Montaño. The district court agreed with the insured man and determined that UM/UIM coverage must be equalized to the limits of the policy’s liability coverage, and that policies that previously rejected UM/UIM coverage can be retroactively invalidated, pursuant to the New Mexico Supreme Court holdings. The district court also held that the language in the policy limiting the ability to make UM/UIM claims within six years was also unreasonable and unenforceable.

In its analysis, the Supreme Court analyzed the interests of the insurer against the protections for the insured. The Court did not think the six-year limit, by itself, was unreasonable, but they did object to the date the six-year limit was triggered. The Court ruled that a time-to-sue provision triggered by the date of an accident is unreasonable and unenforceable. However, the Court did not find the ruling in Montaño, which imposed rejection requirements for the first time, was a holding to be applied retroactively. Since the policy was issued prior to the date the policy in Montaño was issued, written rejection of UM/UIM coverage was not required.

The New Mexico car accident attorneys at Parnall Law Firm have the auto accident litigation experience you need when reviewing insurance policies to maximize recovery. While you may have taken the responsible steps to provide yourself with as much coverage as possible, many drivers in New Mexico often go without insurance or only hold the minimum amount of coverage required by law. Insurance companies want to limit the amount of money they pay out, including the company that issued your policy. To combat this, you need a knowledgeable, aggressive attorney at your side. If you have been injured in a car accident, call one of our lawyers for a free, confidential analysis today at 505-268-6500.