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Pro-Stacking Policy in New Mexico Gives Way to Place of Contract

When a person gets involved in an automobile accident with someone who does not have liability automobile insurance, the injured party often must look to other available coverage frequently from their own insurance policy. Many such motorists may carry policies which contain uninsured motorist or underinsured motorist coverage so that any damages those policyholders sustain, as a result of an accident, can be covered by their own policies.  For those whose policies have both uninsured and underinsured motorist coverage purchased in New Mexico, and have two or more vehicles, they can "stack" the sets of coverage to pay for damages that exceed the limits of either single type of coverage - usually so long as the total damages do not exceed the sum of the limits of both.


But, in a case decided earlier this year, the Court of Appeals of New Mexico refused to permit stacking where the policyholder purchased the policy in California when living exclusively there. The case of Wilkenson v. State Farm Mutual Automobile Insurance, No. 32,779. (N.M Ct. App. 2014) addressed a situation where the plaintiff who had a residence in California when she purchased a State Farm policy with both of the aforementioned types of coverage subsequently got in an automobile collision in New Mexico. By the time of the wreck, she maintained residences in both states but she maintained the same policy she bought in California.  


State Farm asserted that, since the California policy itself essentially prohibited stacking of the two types of coverage, the New Mexico trial court hearing the case should only allow the plaintiff to recover from one of the two available sets of coverage. The plaintiff disputed that position on the ground that New Mexico law favored stacking; accordingly the District Court should invalidate the anti-stacking provision in her policy. State Farm argued that California law should govern this issue because that is the state where the plaintiff contracted with State Farm.


The trial court decided in State Farm's favor noting the place of the contract takes precedence over the place where the accident occurred. On appeal, the Court of Appeals affirmed that decision noting that, while the state in which the accident occurred governs issues of negligence in a personal injury case, the place (California) of the contract controlled the application of available liability coverage. As a result State Farm only has to provide coverage from one of the two types of coverage. The Wilkerson case illustrates directly how a conflict of law question - which state law's policy should govern the resolution of a specific issue - can have a significant impact on a personal injury plaintiff's recovery of damages related to an automobile accident.


The New Mexico lawyers at Giddens & Gatton Law, PC represent individuals in personal injury suits in New Mexico. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the office at (505) 633-6298 to set up an appointment or visit the firm's website at for more information.

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