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

Heading: Insured's Contractual Expectations

Text: Relying on our decision in Padilla v. Dairyland Insurance Co., 109 N.M. 555, 787 P.2d 835 (1990), the trial court concluded that Samora could reasonably expect UIM coverage by virtue of his contractual relationship with State Farm, the Class I insurer, and that an offset under the present circumstances was not contemplated by the parties. While the trial court is correct that Padilla stands for the proposition that an insured has reasonable expectations in a contractual relationship with an insurance company, we do not believe those expectations extend to the facts of the instant case. Specifically, an insured cannot reasonably expect to recover more than the UIM coverage for which he or she paid. Here, Samora paid for $25,000 of UIM coverage and received $50,000 in benefits from the driver's insurance company. Samora therefore could not expect to recover payment from State Farm. We are cognizant of Samora's argument that permitting both a statutory and a contractual offset results in a double offset on behalf of the insurers. Contrary to Samora's assertion, we believe the two types of offset are distinct. In this case the contractual offset contained in the American States policy affects Samora's status as a Class II insured. In contrast, the mandatory statutory offset contained in Section 66-5-301(B) applies to the Class I insurer, State Farm. We are unpersuaded that any double offset occurred, especially given the fact that Samora did not recover an amount less than his UIM coverage under the State Farm policy, and in fact recovered in excess of that amount.