UM/UIM Demand Letter - New Mexico

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of New Mexico

[LAW FIRM LETTERHEAD]

FOR SETTLEMENT PURPOSES ONLY — ADMISSIBILITY GOVERNED BY NMRA 11-408 AND, IF APPLICABLE, FED. R. EVID. 408

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED — ARTICLE NO. [TRACKING_NUMBER]
AND VIA EMAIL TO: [ADJUSTER_EMAIL]

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[UM_UIM_CLAIMS_DEPARTMENT_ADDRESS]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]
Claim Representative ID/License No.: [ADJUSTER_LICENSE_NUMBER]

Re: FORMAL UM/UIM POLICY LIMITS DEMAND — NEW MEXICO LAW

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND FORMAL DEMAND

This firm represents [CLIENT_NAME] ("our client") in connection with a claim for [uninsured/underinsured] motorist benefits under your policy No. [POLICY_NUMBER] arising from a motor vehicle collision on [__/__/____]. This letter constitutes a formal demand for immediate payment of the full UM/UIM policy limits of $[UM_UIM_LIMITS].

New Mexico law requires UM/UIM coverage to be offered with automobile liability policies delivered or issued for delivery in this state, subject to rejection by the named insured. NMSA 1978 § 66-5-301. Our client [purchased the coverage shown in the declarations / contends that coverage must be reformed because the rejection or selection did not satisfy governing law]. The coverage position and demand below must be conformed to the policy, the offer and rejection documents, the number of insured vehicles, the accident date, and the class of insured.

II. NEW MEXICO UM/UIM LAW — CONTROLLING LEGAL FRAMEWORK

A. Mandatory Coverage Under NMSA 1978 § 66-5-301

New Mexico requires UM coverage to be offered at least at the financial-responsibility minimums: $25,000 per person / $50,000 per occurrence for bodily injury and $10,000 for property damage. NMSA 1978 §§ 66-5-301(A), 66-5-215. Underinsured-motorist coverage is included within UM coverage. Section 66-5-301(B).

Under Jordan v. Allstate Insurance Co., 2010-NMSC-051, an insurer seeking to rely on a selection of less than liability-limit UM/UIM coverage must offer coverage equal to liability limits, disclose the premium for each available level, obtain a written rejection of the maximum coverage, and incorporate that rejection into the policy. A legally deficient rejection may result in reformation to the liability limits. Jordan, ¶¶ 21–22. For multi-vehicle policies, Ullman v. Safeway Insurance Co., 2023-NMSC-030, prospectively required basic stacking information in a meaningful offer, and Kileen v. Didio, 2025-NMSC-038, 578 P.3d 1180, prospectively requires offers and premium disclosures on a per-vehicle basis. Kileen applies to the parties there and to future cases; it should not be presented as automatically invalidating every historical offer. OSI Bulletin 2025-013 directs immediate per-vehicle forms for new applications and policy changes after the decision.

B. Stacking of UM/UIM Coverage

New Mexico stacking analysis is policy- and insured-specific. Class-one insureds may generally aggregate coverages purchased for their benefit, particularly where separate premiums were paid. Schmick v. State Farm Mutual Automobile Insurance Co., 103 N.M. 216, 704 P.2d 1092 (1985). Class-two insureds ordinarily have narrower rights. Anti-stacking language, the offer and rejection documents, the number of vehicles and premiums, and the prospective rules in Ullman and Kileen must all be reviewed before asserting an aggregate limit.

Illustration only: if four $25,000 coverages are legally stackable for this insured and loss, the aggregate before any UIM offset would be $100,000.

Do not treat NMSA 1978 § 66-5-301 as an express, universal stacking mandate or Salas v. Mountain States Mutual Casualty Co., 2009-NMSC-005, as a general stacking-waiver case. Salas concerned a known class-two insured and an insurer's failure to disclose coverage and a consent-to-settle condition in the circumstances presented.

C. Coverage Analysis — This Policy

D. Coverage Trigger

For Uninsured Motorist (UM) Claims — Check All That Apply:

The tortfeasor qualifies as an "uninsured motorist" under NMSA 1978 § 66-5-301 because:

☐ The tortfeasor carried no automobile liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage or reserved rights
☐ The tortfeasor's insurer is insolvent or in receivership
☐ The tortfeasor was a hit-and-run driver who cannot be identified
☐ The applicable policy or endorsement treats the vehicle as uninsured because the available coverage is below the statutory minimum
☐ [________________________________]

For Underinsured Motorist (UIM) Claims — Check All That Apply:

Under NMSA 1978 § 66-5-301(B), compare the sum of applicable tortfeasor bodily-injury liability limits with the limits of the insured's applicable UM coverage. Check only supported statements:

☐ The sum of applicable tortfeasor liability limits, $[TORTFEASOR_LIMITS], is less than the insured's applicable UM/UIM limit of $[UM_UIM_LIMITS]
☐ The insured's compensable damages exceed amounts recoverable from the tortfeasor and available UIM benefits are calculated under Schmick and later authority
☐ The policy contains an exhaustion or settlement condition that has been satisfied, excused, waived, or is disputed as follows: [________________________________]
☐ Our client has reached an agreement with the tortfeasor's carrier and hereby requests consent to settle (see Section VI below)
☐ [________________________________]

E. New Mexico Comparative Fault and Several Liability

New Mexico adopted comparative negligence in Scott v. Rizzo, 1981-NMSC-021, ¶ 22, 96 N.M. 682, 634 P.2d 1234. Proven comparative fault generally reduces recoverable damages proportionally. NMSA 1978 § 41-3A-1 primarily establishes several liability and enumerates exceptions to that rule; it should not be cited as the sole source of the comparative-negligence doctrine. Any proposed allocation should identify its evidentiary basis.

III. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____] [a.m./p.m.], our client was [DESCRIBE_CLIENT_ACTIVITY — e.g., operating a motor vehicle traveling northbound on] [STREET/HIGHWAY NAME] [near/at the intersection of] [CROSS_STREET] in [CITY], New Mexico.

[DETAILED_FACTUAL_NARRATIVE — describe direction of travel, road conditions, weather, lighting, speed limits, what each party was doing, point of impact, etc.]

B. Evidence of Tortfeasor's Negligence

The tortfeasor, [TORTFEASOR_NAME], was negligent under New Mexico law in the following specific respects:

☐ Failure to maintain proper lookout — NMSA 1978 § 66-7-[____]
☐ Failure to yield right-of-way — NMSA 1978 § 66-7-[____]
☐ Following too closely — NMSA 1978 § 66-7-318
☐ Excessive speed / speed unreasonable for conditions — NMSA 1978 § 66-7-301
☐ Texting while driving — NMSA 1978 § 66-7-374
☐ Running red light or stop sign — NMSA 1978 § 66-7-[____]
☐ Improper lane change — NMSA 1978 § 66-7-317
☐ Driving under the influence — NMSA 1978 § 66-8-102
☐ [________________________________]

C. Evidentiary Support

1. Traffic Crash Report
[POLICE_DEPARTMENT / NM State Police] Crash Report No. [REPORT_NUMBER], dated [__/__/____]. Officer [OFFICER_NAME] found [SUMMARY_OF_FINDINGS / CITE CITATION ISSUED IF ANY].

2. Witness Statements
[NUMBER] independent witnesses observed the collision and have provided statements consistent with our client's account. Witnesses include:

• [WITNESS_1_NAME], [BRIEF_DESCRIPTION]
• [WITNESS_2_NAME], [BRIEF_DESCRIPTION]

3. Physical and Forensic Evidence
[DESCRIBE: Point of impact, skid/yaw marks, debris field, vehicle damage patterns, photographs, dashcam footage, surveillance video, etc.]

4. Accident Reconstruction (if applicable)
[EXPERT_NAME], a certified accident reconstructionist, has concluded [SUMMARY_OF_OPINION] based on [METHODOLOGY].

D. Comparative Fault Analysis

Under New Mexico's comparative-negligence doctrine, our client bears [no / [____]%] comparative fault because [EXPLAIN_BASIS]. See Scott v. Rizzo, 1981-NMSC-021. Section 41-3A-1 governs allocation among multiple tortfeasors and its listed exceptions should be evaluated if applicable.

IV. OUR CLIENT'S INJURIES AND MEDICAL TREATMENT

A. Summary of Injuries

As a direct and proximate result of this collision, our client sustained the following injuries:

Primary Diagnoses:

• [PRIMARY_INJURY_1 — e.g., C5-C6 disc herniation with radiculopathy]
• [PRIMARY_INJURY_2 — e.g., traumatic brain injury, Glasgow Coma Scale score [____]]
• [PRIMARY_INJURY_3]

Secondary/Consequential Diagnoses:

• [SECONDARY_INJURY_1]
• [SECONDARY_INJURY_2]

B. Medical Treatment Timeline

C. Current Condition and Prognosis

[DESCRIBE_CURRENT_CONDITION, FUNCTIONAL_LIMITATIONS, AND PROGNOSIS AS OF DATE OF THIS LETTER]

Treating physician [DR_NAME], [SPECIALTY], at [FACILITY/PRACTICE], opines that our client [HAS REACHED/HAS NOT YET REACHED] maximum medical improvement and that [DESCRIBE_PROGNOSIS_AND_FUTURE_CARE_NEEDS].

D. Permanent Impairment Ratings

Our client has sustained permanent impairment as follows:

V. DAMAGES

A. Past Medical Expenses

Attach the amounts actually billed, paid, adjusted, outstanding, and claimed. Counsel must determine the admissible and recoverable measure under current New Mexico law and the evidence in this case.

B. Future Medical Expenses (Present Value)

Based on the life care plan prepared by [LIFE_CARE_PLANNER_NAME], our client will require the following future medical care:

C. Past Lost Income / Earning Capacity

Our client was employed as [OCCUPATION] earning $[WAGE_RATE] [per hour/per year] at [EMPLOYER_NAME].

D. Future Lost Earning Capacity (Present Value)

Vocational expert [EXPERT_NAME] opines that our client has sustained a permanent reduction in earning capacity of $[ANNUAL_LOSS] per year, with a total present value of $[FUTURE_EARNING_CAPACITY_PV].

E. Pain, Suffering, and Non-Economic Damages

[DETAILED_DESCRIPTION_OF_PAIN_SUFFERING, EMOTIONAL_DISTRESS, LOSS_OF_ENJOYMENT_OF_LIFE, DISFIGUREMENT, LOSS_OF_CONSORTIUM]

Our client's supported non-economic damages are valued at $[NON_ECONOMIC_AMOUNT], subject to the governing cause of action, defendant, and any claim-specific statutory limitation.

F. Damages Summary

VI. TORTFEASOR'S LIABILITY COVERAGE — CONSENT TO SETTLE

A. Status of Liability Settlement

We [HAVE REACHED / ARE PURSUING] a settlement with the tortfeasor's liability carrier, [TORTFEASOR_CARRIER], for the tortfeasor's policy limits of $[TORTFEASOR_LIMITS].

B. Request for Consent to Settle and Subrogation Protection

The required New Mexico UM endorsement permits a consent-to-settle exclusion, while also preserving recovery and subrogation rights. 13.12.3.16(A)(1), 13.12.3.17(I) NMAC. Salas v. Mountain States Mutual Casualty Co., 2009-NMSC-005, applied estoppel where the carrier knew that a class-two insured was asserting a claim but failed to disclose the coverage and consent condition. Whether Salas applies depends on comparable knowledge, communications, and prejudice.

We hereby formally request [CARRIER_SHORT_NAME]'s written consent to settle with [TORTFEASOR_CARRIER] for $[TORTFEASOR_LIMITS] within [____] days of this letter.

Please identify the policy provision relied on, state whether consent is granted or denied, and explain any requested step to preserve subrogation. This letter does not assume a statutory response deadline or a mandatory advance-payment procedure that New Mexico law does not specify.

VII. CALCULATION OF UIM BENEFITS DUE

A. UIM Offset Calculation

New Mexico's statutory UIM definition compares liability limits with the insured's applicable UM/UIM limits. Under Schmick, the usual maximum benefit is the lesser of (1) applicable UM/UIM limits minus applicable tortfeasor liability limits and (2) compensable damages minus the tortfeasor's liability coverage. Later cases recognize fact-specific exceptions; for example, Farmers Insurance Co. of Arizona v. Sandoval, 2011-NMCA-051, limited the offset to proceeds actually received where the liability policy excluded the punitive damages sought. Counsel must calculate the offset from the actual policies, coverages, payments, damages, and controlling cases.

B. Full Policy Limits Demand

We hereby formally demand immediate payment of the full UM/UIM policy limits of $[UM_UIM_LIMITS].

Our client's total compensable damages of $[TOTAL_DAMAGES] exceed the combined coverage available from all sources. Any coverage decision and claim handling remain subject to the policy and New Mexico's common-law and statutory standards.

VIII. BAD FAITH WARNING — NEW MEXICO STATUTORY AND COMMON LAW DUTIES

[CARRIER_SHORT_NAME]'s handling of its insured's UM/UIM claim is subject to the policy, common-law good-faith duties, and applicable provisions of the Insurance Code.

A. Common Law Bad Faith — Sloan v. State Farm

The New Mexico Supreme Court has stated that bad faith in a first-party context involves a frivolous or unfounded refusal to pay a claim. Sloan v. State Farm Mutual Automobile Insurance Co., 2004-NMSC-004, ¶ 19, 135 N.M. 106, 85 P.3d 230. The existence of a coverage or valuation dispute does not itself establish bad faith; the investigation, reasons given, and factual and legal basis for the decision matter.

B. Statutory Bad Faith — NMSA 1978 §§ 59A-16-20 and 59A-16-30

NMSA 1978 § 59A-16-20 defines listed practices as unfair and deceptive when knowingly committed or performed with such frequency as to indicate a general business practice. Potentially relevant provisions include:

• (A) Misrepresenting pertinent facts or policy provisions relating to coverages at issue
• (B) Failing to acknowledge and act reasonably promptly upon communications with respect to claims
• (C) Failing to adopt and implement reasonable standards for the prompt investigation of claims
• (D) Failing to affirm or deny coverage within a reasonable time after the insured completes and submits the policy's proof-of-loss requirements
• (E) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear
• (N) Failing to promptly provide a reasonable explanation of the policy, facts, or applicable law relied on for a denial or compromise offer

The current statute contains additional provisions through subsection R, including changes enacted in 2025. Quote only the subsection supported by the facts. NMSA 1978 § 59A-16-30 permits a covered person damaged by an Article 16 violation to seek actual damages in district court. Costs and attorney fees are governed by the statute's prevailing-party and willfulness/groundlessness standards; fees are not automatic.

C. Other Remedies

Any claim for consequential, emotional-distress, or punitive damages must be separately supported by the governing cause of action, proof, jury instructions, and constitutional limits. This demand does not treat those remedies as automatic consequences of NMSA 1978 § 59A-16-30.

D. Prejudgment Interest — NMSA 1978 § 56-8-4

NMSA 1978 § 56-8-4(B) permits a court, in its discretion, to award prejudgment interest of up to 10% from service of the complaint after considering delay and settlement conduct. Section 56-8-4(A) generally sets postjudgment interest at 8.75%; the 15% postjudgment rate applies when the judgment is based on tortious conduct, bad faith, or intentional or willful acts. Neither provision creates automatic 15% prejudgment interest from the date a claim allegedly should have been paid.

IX. ARBITRATION NOTICE

The policy [☐ CONTAINS / ☐ DOES NOT CONTAIN] an arbitration clause for UM/UIM disputes.

[IF POLICY CONTAINS ARBITRATION CLAUSE:]
13.12.3.17(H) NMAC provides that the insured and carrier may agree to arbitrate. If the policy contains an enforceable arbitration agreement covering this dispute, or the parties now agree to arbitrate, treat this letter as notice that our client invokes the procedure specified in [POLICY_SECTION / WRITTEN AGREEMENT]. Otherwise, this letter does not create mandatory arbitration.

Proposed Arbitrator for our client: [ARBITRATOR_NAME / TO BE DESIGNATED]

X. DEMAND DEADLINE AND CONSEQUENCES OF NON-RESPONSE

Deadline

THIS DEMAND EXPIRES AT 5:00 P.M. MOUNTAIN TIME ON [__/__/____].

This deadline is meaningful. After expiration, this demand will be withdrawn and our client will pursue all available remedies in New Mexico courts without limitation.

Consequences of Failure to Tender Policy Limits

If [CARRIER_SHORT_NAME] fails to tender the full policy limits of $[UM_UIM_LIMITS] by the deadline:

1. Suit will be filed in [BERNALILLO COUNTY / ______ COUNTY] District Court, seeking:
   - All UM/UIM policy benefits
   - Statutory damages under NMSA 1978 § 59A-16-30
   - Consequential damages for bad faith
   - Any consequential, emotional-distress, or punitive damages supported by the pleaded claim and proof
   - Costs and attorney's fees if awarded under NMSA 1978 § 59A-16-30 or another applicable authority
   - Prejudgment and postjudgment interest as allowed by NMSA 1978 § 56-8-4

2. A complaint will be filed with:
   - New Mexico Office of the Superintendent of Insurance (OSI)
   1120 Paseo de Peralta, Santa Fe, NM 87501
   Mailing Address: P.O. Box 1689, Santa Fe, NM 87504-1689
   Phone: 855-427-5674 | Complaint portal: osi.state.nm.us/en/complaints

3. Arbitration will be formally demanded (if policy contains arbitration clause)

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to [CARRIER_SHORT_NAME] to immediately preserve all documents and electronically stored information (ESI) related to this claim, including:

☐ Complete claim file (all versions, drafts, and internal versions)
☐ All adjuster notes, activity logs, diaries, and contact records
☐ All internal communications regarding this claim (email, chat, memoranda)
☐ Reserve logs and all reserve change documentation with reasons
☐ Claim handling guidelines, manuals, and training materials
☐ Supervisor and management review notes and approvals
☐ All expert reports, evaluations, and recorded statements
☐ Quality assurance, file review, and audit documentation
☐ All correspondence to/from the insured and counsel
☐ ISO ClaimSearch and NICB inquiry records

Please suspend routine destruction for material reasonably relevant to this dispute. Any later spoliation issue, remedy, or inference will depend on the governing preservation duty, culpability, relevance, prejudice, and the court's rulings.

XII. CONCLUSION

[CLIENT_NAME] has paid premiums for UM/UIM coverage under New Mexico law. [CLIENT_NAME] was injured through the fault of a motorist who [lacked / carried insufficient] insurance. This is precisely the risk for which UM/UIM coverage exists. The liability is clear, the injuries are severe, and the damages vastly exceed the available limits. [CARRIER_SHORT_NAME] should do right by its own insured.

We remain available to discuss this matter. Please direct all communications to:

Respectfully submitted,

[LAW_FIRM_NAME]

By: ___________________________________
[ATTORNEY_NAME]
New Mexico Bar No. [BAR_NUMBER]
[STREET_ADDRESS]
[CITY], NM [ZIP]
Tel: ([____]) [____]-[________]
Fax: ([____]) [____]-[________]
Email: [________________________________]

Counsel for [CLIENT_NAME]

ENCLOSURES:

1. Policy declarations page
2. UM/UIM coverage endorsement and rejection form (if any)
3. UM/UIM selection/rejection forms, per-vehicle offers, premium disclosures, and any anti-stacking provision
4. Traffic crash report — [AGENCY] Report No. [NUMBER]
5. Medical records and bills (itemized)
6. Photographs of vehicles, scene, and injuries
7. Permanent impairment rating report — Dr. [NAME]
8. Life care plan — [PLANNER_NAME]
9. Lost earnings documentation and vocational opinion
10. Expert accident reconstruction report (if applicable)

CC:

• [CLIENT_NAME] (file copy)
• [TORTFEASOR_CARRIER] (re: consent to settle with tortfeasor)

NEW MEXICO UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• NMSA 1978 § 66-5-301 (UM/UIM): https://law.justia.com/codes/new-mexico/chapter-66/article-5/part-4/section-66-5-301/
• NMSA 1978 § 66-5-215 (liability minimums): https://law.justia.com/codes/new-mexico/chapter-66/article-5/part-3/section-66-5-215/
• NMSA 1978 § 59A-16-20 (Unfair Claims Practices): https://law.justia.com/codes/new-mexico/chapter-59a/article-16/section-59a-16-20/
• NMSA 1978 § 59A-16-30 (Private Right of Action): https://law.justia.com/codes/new-mexico/chapter-59a/article-16/section-59a-16-30/
• NMSA 1978 § 41-3A-1 (Several Liability): https://law.justia.com/codes/new-mexico/chapter-41/article-3a/section-41-3a-1/
• NMSA 1978 § 56-8-4 (prejudgment and postjudgment interest): https://law.justia.com/codes/new-mexico/chapter-56/article-8/section-56-8-4/
• 13.12.3 NMAC (required UM endorsement): https://srca.nm.gov/parts/title13/13.012.0003.html
• Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 704 P.2d 1092 (1985): https://www.courtlistener.com/opinion/1189056/
• Farmers Insurance Co. of Arizona v. Sandoval, 2011-NMCA-051: https://coa.nmcourts.gov/wp-content/uploads/sites/43/2024/01/Farmers-Insurance-v-Sandoval-FO.pdf
• Scott v. Rizzo, 1981-NMSC-021, 96 N.M. 682, 634 P.2d 1234
• Salas v. Mountain States Mut. Cas. Co., 2009-NMSC-005, 145 N.M. 542, 202 P.3d 801
• Martinez v. Cornejo, 2009-NMCA-011, 146 N.M. 223, 208 P.3d 443
• Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-004: https://law.justia.com/cases/new-mexico/supreme-court/2004/953c.html
• Jordan v. Allstate Ins. Co., 2010-NMSC-051: https://law.justia.com/cases/new-mexico/supreme-court/2010/17.html
• Ullman v. Safeway Ins. Co., 2023-NMSC-030: https://law.justia.com/cases/new-mexico/supreme-court/2023/s-1-sc-36580.html
• Kileen v. Didio, 2025-NMSC-038 official court summary: https://nmcourts.gov/wp-content/uploads/2025/06/Supreme-Court-clarifies-how-insurers-must-offer-uninsured-and-underinsured-motorist-coverage.pdf
• NM OSI Bulletin 2025-013 (Per-Vehicle UM/UIM Offer): https://www.osi.state.nm.us/en/news/bulletin-2025-013/
• NM OSI complaint portal: https://www.osi.state.nm.us/en/complaints/