Stacking Allowed With Improper Rejection of Uninsured/Underinsured Coverage

Uninsured/Underinsured motorist coverage (UM/UIM) is extremely important for drivers. This is particularly so in New Mexico which has a very high rate of uninsured drivers. Many more are underinsured carrying on the legal minimum of $25,000 in liability coverage.

In cases of auto accidents causing serious personal injuries or death, there is very good possibility that the only true protection will be in the form of UM/UIM. And much of that protection will come in the form of stacking of UM/UIM coverages across multiple policies.

Stacking of UM/UIM Coverage

Stacking of coverage as suggested allows for those injured in an auto accident to combine the coverages from multiple vehicles insured within the home. For example, if there are 3 cars in the home each with coverage of $25,000, the total available UM/UIM is $75,000. As may easily be seen, stacking is often essential for any meaningful recovery in cases of serious injury or death.

The recent New Mexico Court of Appeals case of Arias v. Phoenix Indemnity took up the issue of stacking in the context of an invalid rejection of UM/UIM coverage. The New Mexico courts have been fairly aggressive in protecting consumers against the uninformed rejection of UM/UIM coverage.

Rejection of UM/UIM Must be in Writing and Attached to Policy

The Courts have put significant requirements on insurance companies to provide information in writing and signed by the insured showing a knowing and informed rejection of UM/UIM coverage. Notably, the Court in its previous ruling between the same parties in Arias v. Phoenix Indemnity case found that a rejection of UM/UIM was defective even though it was in writing because it had not been attached to the policy.

In that case, the insured was found to have UM/UIM coverage despite a signed rejection because the rejection had not been properly attached to the policy. This gave rise to the current appeal as to whether the insured would receive the full benefits of stacking across multiple vehicles, again as a result of the invalid rejection.

The Court of Appeals found that the insured was fully entitled to stacking due to the invalid rejection. Like any other rejection of UM/UIM, a rejection of stacking must be in writing and attached to the policy. It should be noted that the default allows for stacking unless properly rejected by the insured.  As such, in the absence of a valid rejection, the insured will be entitled to full UM/UIM coverage including stacking.

Very Strong New Mexico Policy in Favor of UM/UIM

New Mexico’s has a very strong policy in favor of expansive protection of policy holders with respect to UM/UIM. The Court stated the policy as follows:

“Our Supreme Court further stated that the UM/UIM statute “embodies a public policy of New Mexico to make uninsured motorist coverage a part of every automobile liability insurance policy issued in this state,” and “[t]he statute was intended to expand insurance coverage and to protect individual members of the public against the hazard of culpable uninsured motorists… the statute should be liberally interpreted in order to implement its remedial purpose, and the language in the statute that provides for an exception to UM/UIM coverage should be construed strictly to protect the insured.”

Thus the Court stated that the “default position of our courts is that any rejection of coverage that is found to be invalid … results in courts reforming the insurance policy in question by reading into it UM/UIM coverage as if it was fully provided at the level of policy limits to the insured in the first instance.”  Again, this includes the full protection of stacking which was also not properly rejected

Insurance Companies Will Continue Efforts to Deny UM/UIM

This is good news for insurance buyers. However, consumers should be aware that some insurance companies will do their level best to obtain a valid rejection of not only UM/UIM but also stacking.

The Court of Appeals actually addressed what will likely become a trend and/or policy for some insurers where one policy will be issued for multiple vehicles with a written rejection of stacking across all policies.  Do not agree to this!

Do Not Reject Uninsured/Underinsured Motorist Coverage!

Purchasers of auto insurance should not sign any waiver of UM/UIM whatsoever including stacking. If you have any doubts, ask yourself why it is that insurers would go to such lengths to obtain rejections of UM/UIM thereby giving up a premium.  The simple answer is that UM/UIM is perhaps the best deal in coverage.

The bottom line is there is absolutely no good reason to waive UM/UIM coverage while there is one very important reason not to and that is the health and welfare of you and your loved ones.

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