Written by Parnall Law Firm reviewed by Bert Parnall
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.
Before we explore this new law, let’s get a full understanding of uninsured motorist insurance (UM) in New Mexico.
What Is Uninsured Motorist Coverage in New Mexico?
When it comes to protecting yourself from the financial burden of an accident caused by an uninsured or underinsured driver, uninsured motorist coverage is an important consideration. In New Mexico, uninsured motorist coverage is a type of insurance that provides financial protection in the event that you are involved in an accident with a driver who does not have insurance or whose insurance coverage is not enough to cover the damages.
Having uninsured motorist coverage can give you peace of mind knowing that you are financially protected in case you are in an accident with an uninsured or underinsured driver. This coverage can help cover medical expenses, property damage, and other losses resulting from the accident.It’s worth noting that New Mexico requires every car insurance policy to include both UM and UIM protection, although this coverage may be rejected (N.M. Stat. § 66-5-301).
Without uninsured motorist coverage, you could be left with the burden of paying for your own medical expenses, repairing or replacing your vehicle, and other costs associated with the accident. This can be a significant financial strain, especially if you are already dealing with the physical and emotional aftermath of an accident. By having uninsured motorist coverage, you can ensure that you have the financial resources to get back on your feet and move forward after an accident.
Remember that uninsured motorist coverage is not limited to accidents involving other vehicles. It can also provide coverage if you are involved in a hit-and-run accident or if you are a pedestrian or cyclist injured by an uninsured or underinsured driver. In these situations, having uninsured motorist coverage can be a valuable safeguard against unexpected costs.
New Mexico Supreme Court’s Decision
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.
How Much UM/UIM Coverage Should I Get?
When it comes to protecting yourself and your loved ones on the road, having sufficient Uninsured/Underinsured Motorist (UM/UIM) coverage is crucial. But how much coverage should you get? The answer depends on several factors, including your specific needs and budget.
First and foremost, it’s important to understand what UM/UIM coverage is. This type of coverage is designed to protect you in the event that you’re involved in an accident with a driver who either doesn’t have insurance or doesn’t have enough insurance to fully cover the damages. In such situations, your UM/UIM coverage can step in and help compensate you for medical bills, lost wages, and other expenses.
To determine the amount of UM/UIM coverage that’s right for you, it’s essential to evaluate your own unique circumstances. Consider factors such as your overall financial situation and the potential risks you may face on the road. If you frequently travel on busy highways or in areas with a high rate of uninsured drivers, you may want to consider higher limits for your coverage.
Additionally, think about your personal assets and liabilities. If you have significant assets, such as a home or valuable property, it’s essential to ensure you will be compensated for damage to them resulting from a car accident. In such cases, it’s advisable to consider higher UM/UIM coverage limits to safeguard your assets.
Furthermore, take into account your budgetary constraints. While having high UM/UIM coverage limits may provide additional peace of mind, it’s important to ensure that the premiums are affordable for you. Consider speaking with your insurance agent or attorney to strike a balance between adequate coverage and a premium that fits within your budget.
How Much Does an Insurance UM Policy in New Mexico Pay Out?
Again, in the state of New Mexico, it’s mandatory for all drivers to have uninsured motorist (UM) coverage to safeguard themselves and their passengers against the potential financial burdens of such incidents.
When involved in a car accident with an uninsured or underinsured driver, you may be entitled to compensation through your UM policy. The amount of payout you can receive depends on various factors, including the limits of your policy.
The minimum UM policy limits in New Mexico are set at $25,000 per person and $50,000 per accident. This means that if you are injured in an accident caused by an uninsured or underinsured driver, your UM policy can potentially pay out up to $25,000 for your medical expenses, lost wages, and other damages. In the case of multiple injured parties, the maximum payout for a single accident is $50,000.
However, it’s important to note that these minimum limits may not always be sufficient to cover all the damages and losses resulting from a serious accident. Medical bills and rehabilitation costs can quickly add up, leaving you with a significant financial burden. That’s why it’s advisable to consider higher UM policy limits to ensure adequate protection in the event of a severe accident.
Contact a Car Accident Attorney in New Mexico
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.
