Every motorist in New Mexico must carry liability insurance, which pays out claims when the driver injures other people. Unfortunately, even though liability insurance is required, far too many motorists in Mexico refuse to carry it. In fact, research has shown that an astounding 1 in 5 drivers in this state don’t carry any liability insurance. This is in direct violation of New Mexico law.
Helpfully, New Mexico also requires that insurance companies offer their clients uninsured/underinsured motorist insurance, also known as “UM/UIM” coverage. This insurance steps in and will cover damages caused when someone else is at fault but, for whatever reason, doesn’t carry sufficient liability insurance.
Understanding UM/UIM Coverage
Uninsured/Underinsured Motorist insurance will protect you in three situations:
- Another driver causes a crash but has no liability insurance.
- Another driver causes a crash and carries liability insurance, but the policy does not pay enough to fully compensate you for your damages.
- You are the victim of a hit and run and do not know who is responsible for the crash.
UM/UIM coverage has several policy limits—a property damage policy limit, which will pay damage to your property, and a bodily injury limit that pays for medical care, lost wages, emotional distress, and pain and suffering.
According to New Mexico statute 66-5-301, all insurance companies must offer UM/UIM insurance to their insureds in connection with any liability insurance they offer. Another statute requires the following minimums:
- Property damage: $10,000 per accident.
- Bodily injury: $25,000 per person/$50,000 per accident if two or more people are injured in the crash.
Helpfully, New Mexico motorists can purchase a policy with a higher limit. Because there are so many uninsured motorists on the road, careful drivers should obtain as much UM/UIM insurance as fits realistically within their budgets.
Applying UM/UIM Insurance
There is a simple reason why you should buy as much UM/UIM coverage as possible. UM/UIM coverage is considered reduction coverage. When a driver has no liability coverage, there is no reduction to the UM/UIM policy. Instead, the UM/UIM insurer pays all damages (subject to the policy limit). For example, if you have a $50,000 UM/UIM policy and are the victim of a hit and run, then your entire $50,000 is available to pay your damages.
However, if the driver who caused the accident carries liability insurance, then your UM/UIM insurance is reduced by that amount. Consider the following:
- The injured driver has a $100,000 UM/UIM policy, and the at-fault driver has $25,000 in liability insurance. In this situation, there is $75,000 in UM/UIM benefits available to the injured driver.
- The injured driver has a $50,000 UM/UIM policy, and the at-fault driver has $25,000 in liability insurance. In this situation, there is $25,000 in UM/UIM benefits available.
- The injured driver has a $25,000 UM/UIM policy, and the at-fault driver has $25,000 in liability insurance. In this situation, there are no UM/UIM benefits available to the injured driver.
The state’s minimum liability insurance is $25,000, so only having $25,000 in UM/UIM coverage will help only if the other driver is completely uninsured. If you want more than $25,000 available after a crash, you should buy UM/UIM coverage with a higher policy limit. Given the high costs of medical care, $25,000 can get eaten up very quickly. Having surgery to set a broken bone or spending a couple nights in the hospital can quickly deplete $25,000 in benefits. However, if you buy $100,000 in UM/UIM coverage, then you will have extra funds available in the event of a devastating crash.
Rejecting UM/UIM Coverage
Although insurers must offer you this coverage, motorists can still reject it. Unfortunately, hoping to save money, far too many do. They are left without adequate protection when struck by an uninsured or underinsured driver. New Mexico recognizes how important UM/UIM coverage is and therefore makes it difficult for insurance companies to let insureds reject UM/UIM coverage.
First, any rejection must be in writing. It should also be attached to the insurance policy sent to the insured. Also, the insurance company must give insureds information about how much UM/UIM insurance costs. If the insurance policy does not contain this information, then there has been no rejection, and the insurance company must provide UM/UIM coverage.
Second, insurance companies are required to offered insureds a policy amount in UM/UIM coverage that is equal to their liability policy. For example, if an insured buys $75,000 in liability insurance, then the insurance company must offer $75,000 in UM/UIM coverage.
Stacking UM/UIM Policies
Stacking is a helpful way of increasing the amount of coverage available and is allowed in New Mexico. It works like this: suppose you are paying premiums for a $25,000 UM/UIM policy for two vehicles. In the event of an accident, you can stack the UM/UIM limits for both of these vehicles, which will make a total of $50,000 available to you. If you are paying premiums for three vehicles on the policy, then $75,000 becomes available. Stacking can dramatically help an injured motorist by increasing the amount of coverage they can access.
All of the named insureds in the policy can stack. Stacking is also available to others if they are related to you. For example, in New Mexico, your spouse and any relatives living in your household can stack all of the UM/UIM policies you purchase in which you are the named insured.
New Mexico’s stacking rules are complex and cannot all be adequately summarized here. After a collision, you should meet with an experienced New Mexico car accident lawyer who can advise you about what insurance policies you can use to cover your losses.
Consult with a New Mexico Car Accident Attorney
After a crash, many motorists are unsure about what to do next. Insurance policies generate too much paperwork, and many motorists do not understand what coverage they currently carry. If you were the victim of a hit and run, then you might also fear that you have no options for receiving financial help.
For assistance in understanding your options, you should meet with a car accident attorney at Flores, Tawney & Acosta. Our lawyers have decades of combined experience and can identify your best position going forward.
To schedule your free consultation, please call 575-222-1000 or message us.