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 Defendants insured five vehicles with the Plaintiff under two policies: a multi-vehicle policy covering four vehicles and a single-vehicle policy. Until April 1990, the Plaintiff charged separate premiums for uninsured motorist coverage for each vehicle under the multi-vehicle policy. After April 1990, the Plaintiff charged a single premium for uninsured motorist coverage under the multi-vehicle policy. In May 1990, one of the Defendants was injured in an accident involving an underinsured motorist. The Defendants sought to stack the underinsured motorist coverage for all four vehicles under the multi-vehicle policy, which the Plaintiff disputed.
Procedural History
- United States District Court for the District of New Mexico: Certified four questions to the Supreme Court of New Mexico regarding the interpretation of the insurance policy and the permissibility of stacking underinsured motorist coverage.
Parties' Submissions
- Plaintiff (Allstate Insurance Company): Argued that the policy unambiguously precluded stacking of underinsured motorist coverage through its "Limits of Liability" clause. Claimed that policyholders were informed of the change in rate structure and the discontinuation of intra-policy stacking upon renewal.
- Defendants (Thomas and Bertha Stone): Contended that the policy was ambiguous and could be interpreted to allow stacking of underinsured motorist coverage. Asserted that they reasonably expected the same coverage as before the policy renewal.
Legal Issues
- Can an insurer prohibit stacking of uninsured and underinsured motorist coverage in a multi-vehicle policy if the policy language purports to do so and a single premium is charged for such coverage?
- Does the policy at issue clearly and unambiguously preclude stacking of uninsured and underinsured motorist coverage?
- If additional premiums are charged for multi-vehicle uninsured and underinsured motorist coverage, can the insured stack coverage for each vehicle, or only for the number of premiums paid?.
Disposition
- The Supreme Court of New Mexico held that the policy did not unambiguously preclude stacking of underinsured motorist coverage and allowed the Defendants to stack coverage for the four vehicles under the multi-vehicle policy.
Reasons
Per Frost J. (Baca and Montgomery JJ. concurring):
The Court found an internal inconsistency in the Plaintiff's insurance policy. While the "Limits of Liability" clause purported to preclude stacking, another section of the policy under "Combining Limits Of Two Or More Autos Prohibited" explicitly allowed stacking for uninsured motorist coverage. This irreconcilable conflict rendered the exclusionary language ineffective. The Court emphasized that ambiguities in insurance policies must be construed in favor of the insured and against the insurer. The Defendants' reasonable expectation of coverage, based on prior policy terms, further supported the decision to allow stacking. The Court declined to address the remaining certified questions, as the resolution of the second question was dispositive.