Opinion ID: 1163429
Heading Depth: 3
Heading Rank: 2

Heading: Statutory Offset

Text: Section 66-5-301(B) defines an underinsured motorist as an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage. In Schmick v. State Farm Mutual Automobile Insurance Co., 103 N.M. 216, 223, 704 P.2d 1092, 1099 (1985), we interpreted the statutory definition of underinsured as inherently including an offset equal to the tortfeasor's liability coverage. Specifically, we noted that because Section 66-5-301(B) limits the insured's [1] recovery to the amount of uninsured motorist coverage purchased for his or her benefit, see id., assuming the insured's damages exceed the amount of that coveragea person will be underinsured only when the aggregate of the insured's uninsured motorist coverage reduced by the tortfeasor's liability coverage is greater than zero. Thus offset is required to ensure that the insured does not receive payment from his or her insurer greater than the coverage purchased. State Farm contends that the offset mandated by Section 66-5-301(B) entitles it to offset the $50,000 liability-insurance payment made to Samora by American States against the $25,000 UIM coverage provided under its own insurance policy. Thus, State Farm reasons, Samora is not entitled to any additional payment because he received twice the amount of the $25,000 limit contained in the State Farm policy. State Farm contends that as a Class I insurer, it is entitled to the statutory offset. We agree with State Farm that it is entitled to the statutory offset. Our determination is consistent with the second part of Section 66-5-301(B), which refers to the insured's UIM coverage, and, therefore, necessarily refers to the injured party's insurance company, the Class I insurer. Applying the statutory offset to this case, the $25,000 in UIM coverage provided by Samora's State Farm policy is completely offset by the $50,000 paid to him by American States. According to the definition of Section 66-5-301(B), the negligent driver was not underinsured because the negligent driver's liability coverage of $50,000 exceeded Samora's UIM coverage of $25,000. See Schmick, 103 N.M. at 223, 704 P.2d at 1098. Therefore, Samora was not entitled to any additional payment from State Farm.