Opinion ID: 2521578
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiff's Public Policy Argument

Text: {8} Plaintiff first argues that we should follow United States Fidelity & Guaranty Co. v. Ferguson, 698 So.2d 77 (Miss.1997), and declare that all anti-stacking clauses are void as against New Mexico's stated policy in favor of stacking. In Ferguson, the Mississippi Supreme Court held that its public policy required stacking of UM coverage for every vehicle insured under every policy regardless of the number or amount of premiums paid for the coverage. Id. at 79. The Mississippi Supreme Court had previously determined that the intent of Mississippi's UM statute was to provide the insured with adequate protection against injury caused by an uninsured motorist, id. (emphasis added), and that stacking had become a positive gloss on the UM statute. Id. (quoted authority omitted). The court was skeptical of traditional notions of freedom of contract because insurance contracts are contracts of adhesion: When the entire insurance industry writes its policies to preclude stacking of UM coverage, attempting to circumvent case law and defeat public policy, the insured is denied any choice whatsoever. Id. at 80. For these reasons the Court determined that, no matter the premiums paid, stacking would be required. {9} Although our cases have expressed a public policy in favor of stacking as broadly as did the cases in Mississippi prior to Ferguson, we are not willing to expand this public policy at this time to require stacking in all cases. We have always understood stacking to be the remedy for an ambiguous contract or the charging of multiple premiums. This Court's intra-policy stacking jurisprudence begins with Lopez, 98 N.M. at 166, 646 P.2d at 1230. In Lopez the insured had purchased an insurance policy covering two automobiles and had paid separate premiums for UM coverage on each vehicle. Despite the clarity of the limitation-of-liability clause in that case, we found the policy ambiguous because it did not explain the effects of multiple premiums paid for UM coverage under the multi-vehicle policy. Having found an ambiguity, we determined that judicial construction of the policy was required. In deciding to allow the insured to stack his coverage limits, we relied primarily on two rationales which we found to be closely related: (1) intra-policy stacking fulfills the reasonable expectation of the insured, and (2) paying two premiums entitles an insured to two recoveries. We noted that [w]here an insurance company charges a separate full uninsured motorist premium for each vehicle under a single or several policies, it is only fair that the insured be permitted to stack the coverages for which he has paid, even when the second premium is reduced. Id. at 171, 646 P.2d at 1235. Our rationale was guided by the simple fact that UM personal injury coverage does not follow the automobile. Instead we recognized that general UM coverage also insures one against bodily injury while a pedestrian or a passenger in someone else's vehicle. Id. at 169, 646 P.2d at 1233. {10} One option available to the insurance industry following our holding in Lopez was simply to accept that charging multiple premiums would result in stacking. The industry could then have adjusted its premiums accordingly while giving the insured the right to accept or reject stacked coverages. Instead, insurance companies have sought only to avoid stacking coverages. These efforts continued to meet with the disapprobation of the courts, due primarily to the ambiguities that persisted with anti-stacking provisions. See Jimenez v. Foundation Reserve Ins. Co., 107 N.M. 322, 757 P.2d 792 (1988); Rodriguez, 118 N.M. at 127, 879 P.2d at 759. {11} In Jimenez we held that, although the policy at issue unambiguously precluded stacking, that exclusion violated public policy because multiple premiums had been charged. In so doing, we emphasized the second rationale in Lopez over the first: [T]he law in New Mexico ... has been clear that when an injured insured is the beneficiary of a policy and either the insured or another has paid premiums for the benefit of the injured insured, then all policy coverages under which he or she is a beneficiary may be stacked. Jimenez, 107 N.M. at 325, 757 P.2d at 795. {12} In Rodriguez we had the opportunity to determine exactly the question presented in this case, specifically, whether we would preclude stacking when the insurance policy purports to preclude it and it appears that only one premium was charged. We initially noted that: [P]remium structures for uninsured motorist benefits in multi-car policies that purport to avoid a separate charge for the coverage with respect to each car ... lay[ ] heavy stress on the rationale in many of our cases predicating stacking, in significant part, on the insured's payment of multiple premiums for multiple coveragesi.e., a separate premium for the uninsured motorist coverage on each car insured under the policy. 118 N.M. at 127, 879 P.2d at 759. Because of a different ambiguity in the policy, however, we did not have to determine whether we would require stacking when a true single premium had been paid. {13} The policy at issue in Rodriguez included a declarations page that stated that insurance is provided where a premium is shown for the coverage, and included a chart with types of insurance on one axis and cars on the other. Id. at 128, 879 P.2d at 760. In the row labeled uninsured motorist, the policy listed the full price of the coverage in the first car's column, and listed INCL in each other column. The parties disputed whether the insurer charged separate premiums for each automobile. We determined that, when deciding whether more than one premium has been paid, the essential factor... is whether a reasonable insured ... would think that she was paying more than one premium for more than one coverage. Id. at 130, 879 P.2d at 762. We concluded that the policy was ambiguous as to whether more than one premium was paid because: (1) it was unclear what INCL meant in the policy declarations page; (2) because, although UM insurance follows the insured, not the car, the UM coverage was listed on a car-to-car basis; and (3) because the figures used in the limitation of liability section contradicted those on the declaration page. Because of these ambiguities, we construed the policy against the insurer and concluded that stacking was permitted. Id. at 133, 879 P.2d at 765; see also Allstate Ins. Co. v. Stone, 116 N.M. 464, 863 P.2d 1085 (1993) (declining to determine whether stacking would be required when the policy purports to charge only one premium, because other aspects of the contract remained ambiguous). {14} Importantly, however, we further stated that it is [not] impossible for an insurance company to issue uninsured motorist coverage that is immune to stacking. Rodriguez, 118 N.M. at 133, 879 P.2d at 765. Noting that we had given effect to an unambiguous clause providing that medical payments coverages could not be stacked in Sanchez v. Herrera, 109 N.M. 155, 783 P.2d 465 (1989), we indicated that it may be possible to give effect to a truly unambiguous antistacking clause, provided it plainly notifies the insured that only one premium has been charged for one insurance coverage, that the coverage provides personal accident insurance that cannot be stacked regardless of the number of vehicles covered by the policy, and that the insured should bear this feature in mind when purchasing insurance. Rodriguez, 118 N.M. at 133, 879 P.2d at 765. {15} We have never held that anti-stacking clauses violate public policy when unambiguous and when only one premium has been charged for the coverage. In fact, the above dicta in Rodriguez strongly suggested that we would give effect to anti-stacking clauses in UM policiesas we had in Sanchez for a med-pay provisionwhen they are truly unambiguous and plainly only charge one premium for one coverage limit. Plaintiff asks us to modify our case law and declare that all anti-stacking clauses are void as against public policy. We think that such a determination would expand the public policy in favor of stacking beyond what these earlier cases have declared it to be. Our public policy in support of stacking, rather, has always been tied to the notion that it is unfair not to allow stacking when multiple premiums are paid or when the policy is otherwise ambiguous. It would thus be an expansion of that policy to also require stacking when the policy clearly only charges a single premium and unambiguously precludes stacking. We decline to modify our case law in order to expand our expression of the public policy underlying stacking. {16} Further, requiring stacking in all cases on a take-it-or-leave-it basis would reduce the freedom of the parties to contract for less coverage and thus their freedom to decide how much coverage they can afford. This could frustrate, rather than advance, the legislative intent behind the UM statute. By requiring insurers to offer UM coverage, see NMSA 1978, § 66-5-301 (1983), the legislature wanted to encourage insureds to purchase such coverage. Requiring stacking for all vehicles would put the insured who owns multiple vehicles in the position of paying for all of the coverages or rejecting UM coverage altogether, rather than deciding how much coverage they can afford. This could result in some lower-income insureds who own multiple vehicles being effectively priced out of UM coverage. {17} Stacking is a judicially-created doctrine, which thus far has not met the disapproval of the Legislature. Rodriguez, 118 N.M. at 127, 879 P.2d at 759 (noting that our past cases have evolved a strong judicial policy favoring stacking). Although we have declined to adopt Ferguson and declare anti-stacking provisions void as against public policy, the facts of this case convince us that our traditional case-by-case ambiguity analysis has proved unworkable. For that reason, we take this opportunity to chart a new course. Bearing in mind that it is a judicial doctrine, we conclude that the protracted litigation over the validity of anti-stacking clauses in this State demands our continued efforts to clarify when and under what circumstances those provisions might be enforced. In doing so, we must re-evaluate the dicta in Rodriguez that suggested that it was possible for an insurer to draft standard contract language that would preclude stacking. In the face of increasingly complex insurance contracts and pricing strategies, we have become convinced that our case law, which includes the suggestion in Rodriguez of `a safe harbor,' is no longer sufficient to protect the reasonable expectations of insureds and to ensure that they get what they pay for. The history of this litigation and the facts of this case convince us that a new approach is needed to satisfy these twin goals of our stacking jurisprudence. {18} For this new approach, we find Chief Justice Dan Lee's special concurrence in Ferguson persuasive. The Chief Justice was uncomfortable with the approach of the majority, which, in his words, steps across the fine line dividing interpretation of the law [and] promulgation of the law. Ferguson, 698 So.2d at 82 (Dan Lee, C.J., specially concurring). Instead, he looked to the language of Mississippi's UM statute, which, like that in this State, allowed the insured to opt out of UM coverage in writing. In order to clarify and make explicit the intention of the parties, the solution is to treat stacked coverage as extra coverage for which the parties have contracted, and to which the insured is entitled by default, unless the insurance company undertakes the burden of obtaining a separate, comprehensible, and written disclaimer of stacking. Under this rationale those who want stacked coverage pay for it, and those who don't want it don't pay for it. Id. at 84. Such a rule, reasoned the Chief Justice, best balances the interests in permitting private contractual relations between the parties, and honoring the broad intent of the [UM] statute. Id. We agree. {19} In following the special concurrence in Ferguson, we also take guidance from Sections 66-5-301(A) and (C), which together suggest that insurance companies obtain the written rejection of each stacked coverage from its insureds in order to limit that coverage. Section 66-5-301(A) provides that no vehicle liability policy shall be delivered with respect to any vehicle registered or principally garaged in New Mexico unless UM coverage is provided therein. Although this Court interpreted this provision in Lopez as requiring only that each of several vehicles insured under a single policy be covered by one minimum coverage, the court also acknowledged that such an interpretation did not preclude an insured from purchasing additional coverage. Lopez, 98 N.M. at 170, 646 P.2d at 1234. Before this case we have not been called upon to decide the implications of Section 66-5-301(C) on stacking. That provision has been interpreted as requiring an insured to reject UM coverage in writing. Romero v. Dairyland, 111 N.M. 154, 803 P.2d 243 (1990). When these two provisions are read together, we discern a solution to the seemingly inherent ambiguities in anti-stacking clauses: an insurance company should obtain written rejections of stacking in order to limit its liability based on an anti-stacking provision. {20} As an illustration of our holding, in a multiple-vehicle policy insuring three cars, the insurer shall declare the premium charge for each of the three UM coverages and allow the insured to reject, in writing, all or some of the offered coverages. Thus, hypothetically, in the case of a $25,000 policy, if the premium for one UM coverage is $65, two coverages is an additional $60, and three coverages $57 more, the insured who paid all three (for a total premium of $182) would be covered up to $75,000 in UM bodily injury coverage. However, the insured may reject, in writing, the third available coverage and pay $125 for $50,000 of UM coverage; or the insured may reject, in writing, the second and third coverages and pay $65 for $25,000 of UM coverage; or the insured may reject all three UM coverages. In any event, the coverage would not depend on which vehicle, if any, was occupied at the time of the injury. Thus, the insured's expectations will be clear, and an insured will only receive what he or she has paid for. {21} Although we recognize this holding expands the holding in Lopez, or perhaps even calls it into doubt, we deem it necessary in order to effectuate the two functions of our stacking jurisprudence: fulfilling the reasonable expectations of the insured and ensuring that the insured receive what he or she pays for. In all future cases, an insurance policy that complies with this requirement will avoid the conclusion we now draw from the history of stacking litigation in this State, namely, that anti-stacking clauses are almost inherently ambiguous and are no longer effective at precluding stacking. With written waivers, insureds will know exactly what coverage they are receiving and for what cost; if an insurer is charging a higher premium based on the risk created by multiple vehicles, we will leave that to the market to resolve.