Getting Approval of Policy Limits Settlement from Underinsured Carrier
There have been many developments in the recent past concerning uninsured/underinsured motorist coverage (UIM) in New Mexico. The rights of the policy holder with UIM coverage following a car accident have greatly expanded during this time.
Likewise, the duties on insurance carriers in full disclosure concerning UIM coverage have been expanded. However, there a number of duties on the policy holder of which you should be aware.
Sanction of Policy Limits Settlement
Specifically, for our purposes here, the policy holder must obtain the approval/sanction of a policy limits settlement prior to accepting a policy limits settlement. This means notifying the UIM carrier of the policy limits offer of settlement prior to accepting the offer.
Failure to obtain sanction of the policy limits settlement could jeopardize the policy holder’s right to recover under his or her UIM coverage. This can be a trap for the unsuspecting policy holder.
Underinsured Coverage is Critical in New Mexico
An inability to recover under UIM coverage can be financially disastrous. This is particularly so in New Mexico, which leads the nation in uninsured drivers. Many more have inadequate coverage for a serious accident.
This means that if you are in a car accident in New Mexico, there is very good chance that the other driver’s insurance will be insufficient to compensate you for your injuries and other damages.
Why is Sanction Necessary?
The underinsured insurance carrier will want to check the other driver for other assets that might cover the accident. In most cases, this is a mere formality.
In most cases where UIM coverage is invoked, the other driver has no insurance or very little insurance. Drivers who carry little or no insurance are not likely to have any substantial assets. In fact, many will have no discernible assets.
However, the insurance company has the right to confirm this prior to acceptance of a policy limits offer of settlement.
Judgment Proof Defendants
In those cases where there are no assets, then the other driver is likely judgment proof beyond the meager limits of the liability policy if he or she has one.
Judgment proof means that should you be forced to file a lawsuit and win that lawsuit, you would basically have an unenforceable piece of paper from the court. As they say, you cannot get blood from a turnip.
Good Faith of Insurance Company
Your insurance company cannot unreasonably deny acceptance of the policy limits offer. It is rare that an insurance company would deny the policy limits settlement.
However, there are certain insurance companies who shall remain unnamed that have a propensity to evade their financial responsibilities under their policies at every turn. In the case of a refusal to sanction a policy limits settlement where there is no legitimate basis for doing so, this would constitute bad faith insurance practices.
In such cases, the bad faith claim might very well be significantly more valuable than the policy limits on the other driver or under your UIM coverage.
Seek Legal Guidance
As stated in the opening paragraph, issues surrounding uninsured and underinsured motorists can be somewhat complicated. There are many areas where it can and generally is beneficial to have the guidance of a car accident attorney with significant auto insurance experience.
Possible forfeiture of UIM coverage is just one possible risk of a quick settlement with an insurance company without the benefit of an attorney.