Get the fair value you deserve for your totaled vehicle in New Mexico

New Mexico regulates first-party automobile total losses through the Unfair Claims Practices Act at NMSA 1978 § 59A-16-20 and the Insurance Department's general claims regulations at 13.10.13 NMAC. NMSA 1978 § 59A-16-20 prohibits the following claims practices, when knowingly committed or performed with such frequency as to indicate a general business practice: A. misrepresenting to insureds 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 and processing of claims; D. failing to affirm or deny coverage of claims within a reasonable time after proof-of-loss requirements have been completed; E. not attempting in good faith to effectuate prompt, fair and equitable settlements of an insured's claims in which liability has become reasonably clear; F. failing to settle all catastrophic claims within a ninety-day period after the assignment of a catastrophic claim number when a catastrophic loss has been declared; G. compelling insureds to institute litigation to recover amounts due under policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds when such insureds have made claims for amounts reasonably similar to amounts ultimately recovered; H. attempting to settle a claim by an insured for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application; N. failing to provide promptly to a person disposing of a claim a reasonable explanation of the basis relied on in the policy in relation to the facts or applicable law for denial of the claim or for the offer of a compromise settlement. The New Mexico Supreme Court held in Hovet v. Allstate Insurance Co., 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69, that subsection E creates a direct right of action by a third-party claimant against the at-fault driver's liability insurer when the insurer fails to make good-faith efforts to settle a liability claim. The Court of Appeals reaffirmed in Thayer v. State Farm, 2023-NMCA-090, that an insurer that fails to notify its insured of its decision on a proposed settlement within a reasonable time may waive any consent-to-settle provision and lose the right to deny coverage on that basis. Under NMSA 1978 § 66-1-4.16, New Mexico defines a "total loss vehicle" as one the insurer or owner considers uneconomical to repair (a Total Loss Formula approach). New Mexico does not impose a separate licensing requirement on a policyholder's appraiser invoked under the policy's appraisal clause.

New Mexico has one of the most policyholder-friendly bad-faith doctrines in the country. The seminal case is Hovet v. Allstate Insurance Co., 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69, in which the New Mexico Supreme Court held that NMSA 1978 § 59A-16-20(E) creates a direct private right of action by a third-party claimant against the at-fault driver's liability insurer when the insurer fails to attempt good-faith settlement. The Court of Appeals reinforced the doctrine in Dellaria & Carnes v. Farmers Insurance Exchange, 2004-NMCA-132, 136 N.M. 552, 102 P.3d 111, holding that allegations that a third-party claims-handler "offered lower than fair settlements with such frequency as to indicate a general business practice" stated a claim under § 59A-16-20. More recently, Thayer v. State Farm, 2023-NMCA-090, held that an insurer that fails to notify its insured of its decision on a proposed settlement within a reasonable time may waive any consent-to-settle provision and may not rely on it as a basis to deny coverage. Earlier, Dairyland Insurance Co. v. Herman, 1998-NMSC-005, 124 N.M. 624, 954 P.2d 56, established that an insurer's good-faith covenant requires settlement when there is a substantial likelihood that recovery will exceed policy limits. Together, these decisions make New Mexico one of the most favorable jurisdictions in the country for policyholders disputing a low total-loss valuation.