An accident in New Mexico recently resulted in litigation concerning coverage under an automobile insurance policy. The facts, as alleged by the parties, are simple and tragic. Allegedly a woman went to her neighbor’s house to respond to an alarm that had gone off at the house. Sandoval County Sheriff’s Deputies went to the neighbor’s house as well. One of the Deputies accidentally ran over the woman with his car when he was leaving, and she died.
In the next year, the personal representative for the woman’s estate sent a demand letter to the deceased’s automobile insurer, seeking a recovery under the underinsured motorist coverage provisions.
The insurance company refused to pay out. It took the position that the personal representative of the estate of the woman who had been run over by the Deputy could not achieve a recovery under the insurance policy because the estate would be able to recover $400,000, the maximum allowed under the New Mexico Tort Claims Act, from the Sheriff’s Office. The insurance company’s position was that such a recovery would reduce to less than zero the amount recoverable under the underinsured motorist provision of the automobile insurance policy, which limited recovery to $250,000 less any amount paid by the individual or organization responsible for the accident.