Supreme Court clarifies how insurers must offer uninsured and underinsured motorist coverage

Insurance companies must offer uninsured motorist and underinsured motorist coverage on a per-vehicle basis in New Mexico and disclose the premiums for each of a consumer’s vehicles, the state Supreme Court ruled.

UM/UIM coverage protects motorists when the other driver lacks enough insurance to pay for a person’s injuries and damages, according to a news release.

“By offering such coverage on a per-vehicle basis, customers will have the option of purchasing the coverage they can afford rather than pur- chasing UM/UIM coverage on all vehicles on a multi-vehicle policy or rejecting coverage in its entirety,” the court wrote in a unanimous opinion by Justice Julie J. Vargas.

New Mexico’s UM/ UIM statute does not clearly indicate whether insurers are to offer coverage on a per-policy or per-vehicle basis, the release stated. As a result, the justices explained, the court was required to interpret the law “in a manner that effectuates the clear remedial purpose set forth by the Legislature: to encourage New Mexicans to purchase UM/UIM in- surance.”

“Our holding likewise furthers freedom of contract because consumers who select or reject UM/UIM coverage on a per-vehicle basis will receive precisely ‘what they consciously choose to pay for,’ and insurers, having received selection/rejection information for each vehicle, will have a clear understanding of insureds’ expectations and associated risks,” the court wrote.

The ruling restored a damages lawsuit brought by an Albuquerque man, Jared Kileen, against his insurer after a motor vehicle accident in 2018. The insurer, Progressive Direct Insurance Company, denied a claim for UM/UIM coverage because Kileen’s father had rejected the coverage. The lawsuit contended that the rejection of coverage was invalid because Progressive offered UM/ UIM coverage for three motorcycles collectively rather than individually.

A district court in Bernalillo County dismissed Kileen’s lawsuit against Progressive. The Court of Appeals upheld the dismissal, ruling that an “all or nothing” offer of UM/ UIM did not violate state law. The Supreme Court disagreed and returned the case to the district court for further proceedings.

“Because Progressive did not offer UM/UIM coverage on a per-vehicle basis or disclosure premiums accordingly, Kileen was never afforded a meaningful opportunity to accept or reject such coverage,” the justices wrote. “Kileen’s rejection of coverage, as a result, is void because it was not knowingly and intelligently made.”

The court stated that its ruling applied to Kileen’s case and prospectively to future cases and offers of insurance coverage. In his lawsuit, Kileen settled claims against the driver of the other vehicle involved in the accident and that person’s insurer.