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 motor vehicle accident caused by an uninsured motorist, in which the insured sought uninsured/underinsured motorist (UM/UIM) coverage under their automobile insurance policy. The insured had purchased UM/UIM coverage in an amount lower than the liability limits of their policy. The insurer, Progressive Northwestern Insurance Company, argued that the insured's selection of lower UM/UIM coverage constituted a valid rejection of higher coverage. The insured contended that no valid written rejection of UM/UIM coverage was obtained, and therefore, UM/UIM coverage equal to the liability limits should be read into the policy (paras 3-5).
Procedural History
- District Court of Santa Fe County: The district court granted summary judgment in favor of the insured, holding that the insurer failed to obtain a valid written rejection of UM/UIM coverage equal to the liability limits, and therefore, such coverage must be read into the policy (paras 1, 6).
Parties' Submissions
- Appellant (Progressive Northwestern Insurance Company): Argued that New Mexico law only requires insurers to offer UM/UIM coverage equal to the statutory minimum liability limits, not the policy's liability limits. It claimed that the insured's purchase of lower UM/UIM coverage did not constitute a rejection of higher coverage and that the policy's declarations page met regulatory requirements. Progressive also contended that the policy should be interpreted under contract law and that no harm occurred because it had already paid benefits exceeding the liability limits (paras 7, 11, 19, 27, 40-41).
- Appellees (Insured): Asserted that New Mexico law requires insurers to offer UM/UIM coverage up to the liability limits of the policy and that the insurer failed to obtain a valid written rejection of such coverage. They argued that the absence of a valid rejection meant UM/UIM coverage equal to the liability limits should be read into the policy (paras 2, 5, 30).
Legal Issues
- Does New Mexico law require insurers to offer UM/UIM coverage equal to the liability limits of an automobile insurance policy?
- Does the purchase of a lesser amount of UM/UIM coverage constitute a rejection of higher UM/UIM coverage?
- Did the insurer comply with New Mexico's statutory and regulatory requirements for a valid rejection of UM/UIM coverage?
- Should the policy be interpreted under the law of contracts?
Disposition
- The Court of Appeals of New Mexico affirmed the district court's decision, holding that UM/UIM coverage equal to the liability limits must be read into the policy due to the insurer's failure to obtain a valid written rejection (para 44).
Reasons
Per Vanzi J. (Bustamante and Vigil JJ. concurring):
Requirement to Offer UM/UIM Coverage: The court interpreted New Mexico's uninsured motorist statute (Section 66-5-301) to require insurers to offer UM/UIM coverage up to the liability limits of the policy. The statute's language and legislative intent aim to expand insurance coverage and protect insureds from uninsured motorists. The court rejected the insurer's argument that it was only required to offer coverage equal to the statutory minimum liability limits (paras 11-22).
Rejection of UM/UIM Coverage: The court held that the insured's purchase of lower UM/UIM coverage constituted a partial rejection of the higher coverage available under the policy. However, such rejection must comply with statutory and regulatory requirements to be valid (paras 23-26).
Validity of Rejection: The court found that the insurer failed to meet the requirements for a valid rejection of UM/UIM coverage. The policy did not include affirmative evidence of rejection, such as a written rejection attached to the policy, as required by New Mexico law and regulations. The declarations page alone was insufficient to notify the insured of their right to higher UM/UIM coverage or to document a valid rejection (paras 27-34).
Contract Law Argument: The court rejected the insurer's argument that the policy should be interpreted under contract law, noting that insurance policies must comply with public policy as expressed in the uninsured motorist statute and applicable regulations (para 40).
Coverage Offered vs. Benefits Paid: The court dismissed the insurer's argument that it had already paid benefits exceeding the liability limits, emphasizing that the statutory requirement to offer UM/UIM coverage up to the liability limits is distinct from the benefits paid under the policy (paras 41-43).
The court concluded that the insurer's failure to obtain a valid rejection required UM/UIM coverage equal to the liability limits to be read into the policy, affirming the district court's decision (para 44).