Federal Court Forces Insurance Company to Provide Uninsured Motorist Benefits

Recently, the United States District Court for the District of New Mexico dealt a harsh blow to automobile insurers when it forced an insurance company to provide uninsured motorist coverage to a woman who had signed a form turning down the coverage.

This decision upheld New Mexico‘s strict rules addressed in several previous posts requiring specific types of disclosures and notices to be given to anyone who is turning down uninsured/underinsured coverage (UM/UIM coverage). Because in this case the insurer, Nevada General, hadn‘t complied with all of New Mexico‘s requirements for waiver of coverage, it was forced to pay the benefits.

The facts of Nevada General v. Encee are pretty straightforward. The insured plaintiff was covered by a Nevada General auto policy that provided only bodily injury liability coverage that would cover her in the event she was negligent and injured someone else. She was then injured in an accident where the other driver had no insurance coverage.

Ms. Encee requested UM/UIM insurance benefits to cover her injuries even though UM/UIM coverage was not in her policy. Nevada General refused to provide coverage because Ms. Encee had refused the coverage in writing and signed a form stating in three different places that she did not want UM/UIM insurance. However, the form did not exactly comply with New Mexico‘s strict requirements for a “knowing” waiver, as set out in Jordan v. Allstate. Specifically, the form failed to set out the difference in Ms. Encee‘s premium costs relating to the cost of her insurance with and without UM/UIM coverage, which was required by the New Mexico Supreme Court in Jordan. The federal court forced Nevada General to provide the UM/UIM coverage to Ms. Encee even though she never paid for it.

Nevada General argued that being required to provide UM/UIM insurance coverage to Ms. Encee was unconstitutional. Nevada General claimed that the court‘s enforcement of the New Mexico UM/UIM waiver requirements imposed an illegal “taking” under the Fifth and Fourteenth Amendments of the United States Constitution and that it violated the “Contract Clause” of the United States Constitution. Both of these arguments were flatly rejected by the federal court.

Although, it may seem extreme, this decision upholds New Mexico common law protection of individuals who are entitled to uninsured motorist coverage when insurance companies do not provide enough information for them to make a decision about whether they want to purchase coverage. All too often, companies play fast and loose with the disclosure requirements and then deny coverage, claiming that the individual never asked for this very important benefit. Many times, people don‘t realize that they did not have this coverage until it is too late. In New Mexico this can be disastrous in light of the high number of uninsured and underinsured drivers in the state.

If you have been denied coverage for uninsured or underinsured motorist insurance in New Mexico and you believe that you are entitled to it, you very well may have a claim. In fact, even if you settled your claims in the past, were denied uninsured/underinsured coverage, and the claim has long been closed, you may have a claim against your own insurance company for UM/UIM coverage up to the your liability limits.

If you have been denied UM/UIM coverage now or in the past, you should contact at attorney experienced in UM/UIM insurance coverage issues. Collins & Collins is experienced in handling all types of automobile injury cases and is well-informed on the issues relating to UM/UIM coverage.

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