As promised in my last post, I will set forth the issues of import for uninsured/underinsured motorist coverage in New Mexico addressed in Salaz v. Mountain States Mutual Casualty Company. The case is particular interest to injured passengers. However, the case also addresses several more general but equally important issues surrounding uninsured/underinsured motorist coverage.
First, and foremost, a passenger injured in an insured vehicle is covered by that vehicle's uninsured/underinsured motorists coverge. As such, if the other driver has insufficient policy limits to cover the person's injuries, the injured person can make a claim on the uninsured/underinsured provisions of the vehicle in which he or she was a passenger.
Secondly, there is indeed a consent to settle requirement, as asserted by Mountain States, in all uninsured/underinsured claims. In other words, an injured person must notify the uninsured/underinsured insurance provider of an offer of settlement prior to accepting the settlement. The insurance provider can conduct its own investigation to determine whether or not the underinsured driver is in fact judgment proof beyond the policy limits in his or her own coverage (i.e. has no money or assets to collect in a lawsuit). Failure to obtain consent prior to accepting a settlement will waive the uninsured/underinsured coverage.
Next, and equally important as the first two, insurance companies in New Mexico are held to a very high duty of fair dealing in dealing with their insured policy-holders. This includes class-two insureds who have no direct contractual relationship with the insurance company such as Ms. Salaz. This is particularly the case as here where the insurance company knew of the claims and the possible uninsured/underinsured coverage for the injured person and deliberately fails to notify the insured of the coverage.
Finally, and perhaps a little off message here, injured persons should recognize that there are many, not all, insurance companies or individual adjusters that will do everything they can to avoid paying the full value of claims. This is in fact what drives many injured people to lawyers. Countless injured individuals, particularly in smaller claims, attempt to work out their claims directly with an insurance company. Unfortunately, some insurance companies will view this as an opportunity to get off cheap or deny the claim completely. Some injured people just give up and accept this outcome. Others caught in this situation grow so frustrated or angry that they are forced to seek the assistance of an attorney.
Then what? You guessed it. The insurance companies cry foul, spend countless dollars on tort reform lobbying, lament the state of the legal system and the abuses of trial attorneys, and even accuse injured parties of greed for seeking the assistance of an attorney. You can bet that the insurance industry and their lobbyists had a part in designating the New Mexico Appellate Courts #5 on the tort reform list of judicial hellholes.
Thankfully, the New Mexico Courts hold insurance companies accountable time and time again leading one to conclude that hellholes are not all bad.
Uninsured/Underinsured Coverage: An Insurer's Duty to Passengers in New Mexico
Recovery of Punitive Damages Under Uninsured/Underinsured Motorists Coverage
Notice Requirements in New Mexico Uninsured/Underinsured Motorist Cases