Court Discusses What Happens in the Event an Insurance Company Becomes Insolvent

In New Mexico, all motorists are required to obtain a certain amount of car insurance. If a driver causes a New Mexico car accident, and others are injured as a result, the insurance company provides the necessary compensation to the injury victims. A recent case discusses what happens when an insurance company goes out of business before an injury victim’s’ claim is paid.

The Facts of the Case

The plaintiff was the estate of a man who was killed in a truck accident when a pair of tires came loose from an oncoming logging truck and crashed into his vehicle. The impact from the tires colliding with the man’s truck caused the truck’s front axle to snap. The driver then lost control of the truck, crossed into oncoming traffic, and collided head-on with another large truck.

The estate of the deceased truck driver filed a claim against several parties, including the company that insured the logging truck. That policy provided coverage up to $1,000,000. The estate settled the lawsuit for $800,000, and it was able to obtain roughly $377,000. However, during the pendency of the claim against the logging truck’s insurance company, the company became insolvent and could no longer pay out on any of the pending claims.

The case then proceeded against a statutorily created guaranty, which was designed to protect those whose insurance companies become insolvent. State law limited the guaranty’s liability to $300,000 per claim and provided that “any amount payable” was to be reduced by compensation from other sources.

The guaranty argued that the estate’s total recovery amount was $300,000, and should be reduced by $377,000 because the estate had already received that compensation. Essentially, the guaranty argued that the law intended for an injury victim to obtain a minimum of $300,000 and because the estate was able to get more than that amount from other sources, it owed the estate nothing.

The court rejected the guaranty’s argument and held that the proper starting point for the estate’s damages was the settlement amount of $800,000, not $300,000. The court explained that the lawmakers’ intent could not have been to leave the victims of serious accidents without adequate compensation.

New Mexico’s Insurance Guaranty

New Mexico has a guaranty similar to the one named in the case above. Under New Mexico law, those who have insurance policies maintained by companies that go out of business can pursue a claim with the guaranty. However, the limits under the guaranty are $100,000 per occurrence. Thus, it is essential for New Mexico accident victims to locate all potential sources of compensation after an accident to best preserve their chance at a full recovery.

Have You Been Injured in a New Mexico Accident?

If you or a loved one has recently been injured in a New Mexico truck accident, you may be entitled to monetary compensation. The dedicated New Mexico personal injury lawyers at the Fine Law Firm have decades of collective experience representing injury victims in all types of New Mexico personal injury claims. To learn more, call 505-889-FINE to schedule your free consultation today.

More Blog Posts:

Uninsured Motorist Insurance Coverage and New Mexico Hit-and-Run Accidents, New Mexico Personal Injury Lawyer Blog, October 1, 2018.

Federal Appellate Court Affirms Summary Judgment in Favor of Defendant under Daubert Standard, New Mexico Personal Injury Lawyer Blog, September 17, 2018.