The United States District Court for the District of New Mexico recently ruled against an insurance company, and in favor of the wife of a man who was killed when the motorcycle he was driving was hit by a car. The motorcyclist sustained fatal physical injuries while driving down San Mateo Blvd NE in Albuquerque, New Mexico after the driver of an automobile made a left turn resulting in a collision. The driver who struck the motorcyclist was insured, and his insurance company provided a defense when the wife of the deceased motorcyclist sued the driver in state court on behalf of her husband’s estate and on her own behalf for loss of consortium. The parties’ settlement talks allegedly hit an impasse when they could not agree on the policy limit of the automobile driver’s insurance policy, which resulted in the insurance company bringing a declaratory action in federal court to resolve the issue.
The parties agreed that the insurance policy had a limit of $100,000 per person and $200,000 per accident. The insurance company argued that even though the wife of the deceased motorcyclist asserted claims on his behalf as well as on her own behalf for loss of consortium, there was a physical injury to one party only and the so the per person limit applied. The wife of the deceased motorcyclist asserted in response that there were two bodily injuries, hers and her husband’s, so the higher per accident insurance policy limit of $200,000 applied.
To resolve the dispute over the extent of coverage under the insurance policy the district court applied New Mexico law, which resolves disputes over insurance policies by interpreting their provisions in accordance with the same principles that govern the interpretation of contracts. The court explained that, under the controlling law, when policy language is clear and unambiguous, courts must give the contractual language effect and enforce the insurance policy as written.