Phoenix Indemnity Insurance v. Pulis , 129 N.M. 395 ( 2000 )

BACA, Justice

(Specially Concurring).

{29} I agree with the result reached by the majority, however I write separately to express my concern about the consequences of the majority’s holding. I have serious concerns about the wisdom of a rule that allows an insurance company, even with proper notice, to deny uninsured or underinsured motorist coverage for all class-one insureds in a particular policy when a person subject to a driver exclusion provision under the same policy takes the wheel. I believe that this case presents an issue of first impression. This Court has not, until now, been confronted with a factual scenario where an excluded driver, Michael, was driving while, a class-one insured, Steven, was injured as a passenger, and sought compensation under the same policy as the excluded driver. I agree with the majority that the issue before us is whether, “the named-driver exclusion precludes elass-one-insured coverage” but I am not convinced that any amount of notice would be sufficient to deprive Steven or other members of his family of their class-one status. See ante at ¶ 19.

{30} In this ease we are not concerned with Michael’s coverage as the excluded driver, we are only concerned with Steven’s coverage. Steven’s coverage as a class-one insured is derived solely from the provisions of the contract without regard to the driver exclusion provision. As a member of the household, Steven was entitled to class-one status and UM coverage. The question then is whether the driver exclusion will be allowed to trump Steven’s class-one protection. While the majority concludes that the driver exclusion, when read in concert with the policy was ambiguous and ineffective as a waiver of UM coverage, the majority then holds that if an insurance company “adequately informs an insured of the consequences to all class-one insureds of excluding that driver” then the company can exclude “any and all” coverage. See ante at ¶26. I disagree, and doubt whether any amount of notice contained within a driver exclusion would be sufficient to deprive the remaining members of the family of their class-one status.

{31} I recognize that it is completely reasonable to allow insureds to bargain away both liability coverage and UM coverage for individual high-risk drivers by signing driver exclusions, and we have so held. See State Farm Auto. Ins. v. Kiehne, 97 N.M. 470, 472, 641 P.2d 501, 503 (1982) (holding that driver exclusion applies to UM coverage); Garza v. Glen Falls Ins. Co., 105 N.M. 220, 223, 731 P.2d 363, 366 (1986) (holding that driver exclusion applies to liability coverage). I believe that the Legislature, when drafting the broad language contained in NMSA 1978, § 66-5-222 (1998), intended that the excluded driver would have absolutely no coverage while driving. However, I do not believe that the Legislature intended to eliminate all coverage for the entire family when a driver subject to an exclusion under the same policy takes the wheel. More importantly, I do not believe that any reasonable insured would understand they are bargaining away their entire family’s class-one status by signing a driver exclusion for an individual high-risk driver. See Western Commerce Bank v. Reliance Ins. Co., 105 N.M. 346, 348, 732 P.2d 873, 875 (1987) (stating that test for evaluating policy ambiguities is “what a reasonable person in the insured’s position would have understood them to mean”).

{32} We have previously described the broad protection of class-one insureds as “covered by policies no matter where they are or in what circumstances they may be; coverage is not limited to a particular vehicle.” Gamboa v. Allstate Insurance Co., 104 N.M. 756, 758, 726 P.2d 1386, 1388 (1986). With regard to class-one UM coverage we have stated, “There is no requirement in the statute that the insured have any relation, at the time of the accident, with any vehicle he owns and that is insured with the insurer. The uninsured motorists protection covers the insured and the family members while riding in uninsured vehicles, while riding in commercial vehicles, while pedestrians or while rocking on the front porch.” Chavez v. State Farm Mut. Auto. Ins. Co., 87 N.M. 327, 330, 533 P.2d 100, 103 (1975) (quoting Elledge v. Warren, 263 So.2d 912, 918 (La.Ct.App.1972)), superceded by statute recognized in Sandoz v. State Farm Mut. Auto. Ins. Co., 620 So.2d 441 (La.Ct.App.1993). I fail to see how these broad protections could be so easily abrogated for the entire family merely by signing a driver exclusion clause that relates to only one driver. Steven was merely riding in an uninsured vehicle, that happened to be driven by an excluded driver under the same policy, when an accident occurred, and he sought compensation for his injuries as a class-one insured. Since UM coverage is personal and follows the individual, and is not dependent on the excluded driver, this is a situation that UM coverage was designed to address.

{33} I recognize, as does the majority, that the Court in Kiehne seemed to indicate that the class-one insured, Kiehne, could not recover under his own policy because an excluded driver was operating the vehicle. 97 N.M. at 471-72, 641 P.2d at 502-03; see ante at ¶ 13. However, the issue in Kiehne was the recovery of a class-two passenger and not a class-one insured. Since class-two insureds derive their coverage from the status of the vehicle and not from the original policy, the passenger in Kiehne was properly denied coverage. 97 N.M. at 471-72, 641 P.2d at 502-03. In Kiehne there was no coverage on the vehicle while the excluded driver operated it, and therefore, there was no coverage for the class-two insured. However, Kiehne did not face the issue that we address today. I believe that the dicta in Kiehne which suggested that a class-one insured would not be covered failed to recognize the special status that class-one protection affords under New Mexico law.

{34} In the final analysis, I do not believe that once a family has chosen to pay for the protection of UM coverage, a simple driver exclusion should be allowed to infect the entire family’s class-one status regardless of the notice afforded the insured. For these reasons, I specially concur in this case.