This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case arose from a car accident in which the Defendant was injured and settled with the tortfeasor for $100,000. The Defendant then filed a claim with the Plaintiff, her insurer, seeking underinsured motorist (UIM) coverage. The Plaintiff’s policy had liability limits of $1,000,000 but provided UIM coverage of only $100,000. The Defendant argued that the policy should be reformed to provide UIM coverage equal to the liability limits, as the lower coverage amount was not accompanied by a written rejection of the maximum coverage (paras 2-3).
Procedural History
- Progressive Nw. Ins. Co. v. Weed Warrior Servs., 588 F. Supp. 2d 1281 (D.N.M. 2008): The United States District Court for the District of New Mexico ruled in favor of the Plaintiff, holding that the UIM coverage was offset by the tortfeasor’s settlement and rejecting the Defendant’s argument for policy reformation (para 2).
- Appeal to the Tenth Circuit Court of Appeals: The Defendant appealed, and the Tenth Circuit certified the question of whether electing UIM coverage below liability limits constitutes a rejection under New Mexico law to the Supreme Court of New Mexico (para 3).
Parties' Submissions
- Defendants-Appellants: Argued that the insurer failed to obtain a written rejection of UIM coverage equal to the policy’s liability limits, as required by New Mexico law, and that the policy should be reformed to provide $1,000,000 in UIM coverage (paras 2-3).
- Plaintiff-Appellee: Contended that the insured’s affirmative selection of UIM coverage at $100,000 did not constitute a rejection of higher coverage requiring a written waiver (para 3).
Legal Issues
- Does the election to purchase UIM coverage in an amount less than the policy’s liability limits constitute a rejection under New Mexico’s uninsured motorist statute? (para 3)
Disposition
- The Supreme Court of New Mexico held that the election to purchase UIM coverage below the policy’s liability limits constitutes a rejection of the maximum coverage permitted under New Mexico law (para 15).
Reasons
Per Serna J. (Daniels C.J., Maes, Bosson, and Chávez JJ. concurring):
The Court interpreted Section 66-5-301 of the New Mexico statutes, which governs uninsured/underinsured motorist (UM/UIM) coverage, as requiring insurers to offer UIM coverage up to the liability limits of the policy. The Court emphasized that the statute’s purpose is to expand coverage and protect the public from uninsured or underinsured motorists. It held that any election by the insured to purchase UIM coverage below the liability limits constitutes a rejection of the maximum coverage and must be accompanied by a written waiver (paras 5-7, 14).
The Court overruled prior interpretations, such as in Pielhau v. RLI Insurance Co., to the extent they suggested insurers were only required to offer the statutory minimum UIM coverage. It reasoned that the statute’s remedial purpose necessitates a meaningful offer of the maximum coverage available, and the insured’s choice of lower coverage must be an informed and affirmative act (paras 8-10).
The Court concluded that the Plaintiff insurer failed to meet its statutory obligation to offer UIM coverage equal to the liability limits, and the Defendant’s election of lower coverage was invalid without a written rejection (paras 13-15).