Committee advances substitute to require uninsured/underinsured motorist coverage; members debate costs and definitions

Members of the Transportation, Public Works & Capital Improvements committee advanced a committee substitute for House Bill 97 that would require insured motorists to carry uninsured and underinsured motorist coverage and would remove a statutory offset that can negate underinsured benefits.

Representative Anna Norton presented the substitute and said the language was amended to match Senate Bill 319. Alice King, director of the Office of Superintendent of Insurance (OSI), and the OSI chief actuary provided rates and impact context: King said about 90% of New Mexico policyholders already carry uninsured/underinsured motorist coverage; the remaining 10% would be affected at varying degrees. The actuarial figures presented to the committee said that roughly 7% of policyholders who carry multiple coverages would see smaller increases, while 3% of policyholders who currently hold minimum state-mandated coverage could see larger average increases (the actuary estimated that that 3% cohort could face an average increase of about 43%). The OSI actuary also noted that uninsured/underinsured coverage as sold today is bundled and that the substitute removes an offset that has in practice left some underinsured limits illusory.

Advocates and committee members described the offset problem: under current law, a tortfeasor’s liability limits can be used to offset a plaintiff’s underinsured motorist coverage, effectively wiping out the insured’s own protection in many minimum-limit cases. As one presenter summarized, the definitional change in the substitute “takes away that offset so that when you look at your policy and it looks like you have 25 or 50 or a $100,000 in underinsured motorist coverage, you really have it.”

Committee members raised practical concerns about cost and compliance. Members asked whether the mandate would raise premiums for insured drivers, whether it might push low-income residents to drop insurance altogether (which is already illegal), and whether mandating this coverage in New Mexico would mirror experiences in the roughly 20 jurisdictions that already require the benefit. Representative Dowell, with insurance policy background, and others urged presentation of a one-page flowchart or slide set to clarify how coverage and offsets would operate under the substitute.

Representatives from the bill team and OSI said 90% would not see increases; 7% would see smaller increases and 3% of policyholders (those with minimum limits) could see large increases — figures OSI said were clarified since an earlier presentation. OSI also said the uninsured/underinsured coverage typically costs about $200 a year for most policyholders, per the actuary’s context.

Representative Norton moved the committee substitute for discussion; the committee later adopted the committee substitute for discussion and agreed to return with visual aids to clarify the practical effects. No final floor-level vote on the bill was taken in this hearing; the committee directed the sponsor to provide clearer explanatory materials before further action.

The substitute seeks to ensure that insured New Mexicans who purchase underinsured motorist coverage will be able to use the limits they purchased rather than having those limits offset by an at-fault driver’s liability limits.