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 concerns an insured individual who purchased uninsured/underinsured motorist (UM/UIM) coverage for two vehicles in amounts less than the liability limits of their policies. The district court determined that this selection of reduced UM/UIM coverage constituted a rejection of UM/UIM coverage under New Mexico law.
Procedural History
- District Court, Rio Arriba County: Granted summary judgment in favor of the Plaintiff, finding that the insured's selection of reduced UM/UIM coverage constituted a rejection of such coverage that did not comply with statutory and regulatory requirements.
Parties' Submissions
- Appellant (State Farm Mutual Auto Insurance): Argued that the insured's rejection of UM/UIM coverage complied with statutory and regulatory requirements because it was made in writing, included in policy declarations, and the insured was informed of the coverage options multiple times. State Farm contended that this case was distinguishable from prior precedent because the insured had clear notice of the coverage options and made an informed decision.
- Appellee (Plaintiff): Asserted that the rejection of UM/UIM coverage was invalid because it was not "endorsed, attached, stamped, or otherwise made a part of the policy" as required by New Mexico law and regulations. The Plaintiff relied on prior case law, including Romero v. Progressive Northwestern Ins. Co., to argue that the rejection did not meet the necessary formalities.
Legal Issues
- Whether the insured's selection of UM/UIM coverage in amounts less than the liability limits of their policy constituted a valid rejection of UM/UIM coverage under New Mexico law.
- Whether the rejection of UM/UIM coverage complied with the statutory and regulatory requirements for such rejections.
Disposition
- The Court of Appeals affirmed the district court's grant of summary judgment in favor of the Plaintiff.
Reasons
Per Bustamante J. (Wechsler and Sutin JJ. concurring):
The Court relied on its prior decision in Romero v. Progressive Northwestern Ins. Co. (Romero I), which held that an insured's purchase of UM/UIM coverage in amounts less than the liability limits of their policy constitutes a rejection of UM/UIM coverage for the difference between the purchased coverage and the liability limits. Such a rejection must comply with the requirements of NMSA 1978, Section 66-5-301(C) and applicable insurance regulations.
The Court found that State Farm's rejection process did not meet the regulatory requirement that a rejection of UM/UIM coverage be "endorsed, attached, stamped, or otherwise made a part of the policy." The Court emphasized that an insured's knowledge of the coverage options and their decision to purchase reduced coverage is insufficient to satisfy this requirement. The Court cited prior case law, including Romero I, Arias v. Phoenix Indemnity Ins. Co., and Kaiser v. DeCarrera, to support its conclusion that the rejection was invalid because it was not physically incorporated into the policy.
The Court rejected State Farm's argument that the insured's clear notice of coverage options distinguished this case from Romero I, noting that the regulatory requirements for a valid rejection were not met regardless of the insured's awareness or intent.