The Court of Appeals of New Mexico recently entered a ruling concerning the obligation of insurance companies to pay punitive damages. In its ruling, the Court of Appeals reversed a judgment entered by the trial court in favor of an insured car owner that provided the insurance company had to pay him $20,000 in punitive damages, in addition to the $10,000 the insurance company had previously paid the insured by way of compensatory damages.
The insurance coverage dispute arose following a New Mexico car accident that occurred early in the morning, when the owner of a 2001 Chevrolet Suburban was sleeping. An uninsured motorist, then fleeing from police officers, struck the insured’s car when, fortunately, no one was in the car. No one sustained any injuries to their bodies when the accident occurred. But the Chevrolet Suburban sustained disabling damage.
According to the Court of Appeals opinion, the insured incurred $3,566.24 in property damage to his vehicle, and he sought a recovery under the uninsured/underinsured (UM/UIM) property damage provision of his policy. Under his insurance policy, there were coverage limits of $25,000 per person and $50,000 per accident for bodily injury. The insurance policy also had a provision providing a recovery with coverage limits of $10,000 for property damage.