44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO INSURANCE; ENACTING THE PERSONAL CHOICE AUTO INSURANCE ACT; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 26 of this act may be cited as the "Personal Choice Auto Insurance Act".

Section 2. [NEW MATERIAL] LEGISLATIVE FINDINGS--PURPOSES OF ACT.--

A. The legislature finds that under former law, New Mexico motorists were required to purchase liability insurance primarily for the benefit of others. To protect themselves and their family members from other motorists who chose not to comply with the law, motorists had to purchase additional insurance coverage. Motorists who did not purchase liability insurance required by law were nonetheless permitted to make liability claims against motorists who had purchased liability insurance. That system for compensating injured motorists was inefficient and overcompensated persons with non-serious injuries. The costs of compensating injured persons were compounded by extraordinary litigation and claim-processing costs that were ultimately borne by insurance consumers and taxpayers of New Mexico.

B. The purposes of the Personal Choice Auto Insurance Act are to:

(1) give owners of motor vehicles the option to reduce insurance costs by choosing how they will satisfy the requirements of the Mandatory Financial Responsibility Act. Under the Personal Choice Auto Insurance Act, motorists may choose to:

(a) forgo their right to sue for noneconomic and compensated economic damages arising out of a motor vehicle accident, except in certain circumstances, by purchasing a personal compensation policy; or

(b) retain the right to recover for damages under tort principles by rejecting purchase of a personal compensation policy as provided in the Personal Choice Auto Insurance Act;

(2) require insurers to make certain optional coverages available at additional cost to motorists who choose to purchase a personal compensation policy;

(3) encourage motorists to comply with Mandatory Financial Responsibility Act requirements by limiting uninsured motorists' rights to recover for loss;

(4) speed the administration of justice, ease the burden of litigation on New Mexico courts, decrease the expenses associated with litigation and create a system of arbitration of claims for personal compensation benefits; and

(5) correct imbalances and abuses in the operation of the motor vehicle accident insurance system, encourage prompt medical treatment and rehabilitation, provide offsets to avoid duplicate recovery and require medical examinations.

Section 3. [NEW MATERIAL] DEFINITIONS.--As used in the Personal Choice Auto Insurance Act:

A. "accidental bodily injury" means bodily injury, sickness, disease or death arising out of a motor vehicle accident when the motor vehicle accident is unintended by the injured person;

B. "cause of action for injury" means a claim for accidental bodily injury caused by the negligence or intentional misconduct of another person, including a claim by a person other than the injured person based on the injury of the injured person, including loss of consortium, companionship or another derivative claim;

C. "dependent" means a person related to another person by blood, affinity or adoption who resides in the same household with the other person and receives financial or services support from the other person;

D. "driving under the influence of intoxicating liquor or drugs" means a person has been convicted pursuant to Section 66-8-102 NMSA 1978;

E. "economic loss" means pecuniary loss and monetary expense incurred by or on behalf of an injured person as the result of an accidental bodily injury;

F. "injured person" means an individual who sustains accidental bodily injury, or the personal representative of that individuals's estate;

G. "insurer" means an insurer or qualified self-insurer providing coverage on motor vehicles pursuant to the provisions of the Personal Choice Auto Insurance Act;

H. "intentional misconduct" means conduct by a person who:

(1) acts or fails to act for the purpose of causing bodily injury except when the act or omission is for the purpose of averting bodily harm to the person acting or to another; or

(2) knows or reasonably should have known that bodily injury is substantially certain to result from

his conduct;

I. "loss of income from work" means:

(1) if the injured person was employed or self-employed at any time during the year preceding an accident, eighty percent of the average weekly amount the injured person would have earned, or could have reasonably expected to earn but for the accidental bodily injury, through employment in his usual occupation or profession, reduced by either:

(a) eighty percent of the average weekly amount received from substitute employment or self-employment; or

(b) the average weekly amount of income the injured person would have earned in available appropriate substitute employment that the person was capable of performing but unreasonably failed to undertake; or

(2) if the injured person was unemployed, the amount of unemployment compensation benefits the injured person would have been eligible to receive but for the accidental bodily injury, except that "loss of income from work" does not include any loss of income after an injured person's death;

J. "medical expenses" means reasonable expenses incurred by or on behalf of an injured person for necessary medical, chiropractic, surgical, dental, ambulance, hospital, medical rehabilitation, physical therapy and professional nursing services and drugs, medically necessary equipment designed primarily for a medical purpose, eyeglasses, hearing aids and prosthetic devices, but "medical expenses" does not include:

(1) that portion of the charge for a room in a hospital, clinic, convalescent or nursing home, extended care facility or similar facility in excess of the reasonable and customary charge for semi-private accommodations unless otherwise medically necessary;

(2) that portion of a charge or fee for treatments, services, products or procedures that are experimental in nature, for research not primarily designed to serve a medical purpose or not commonly and customarily recognized throughout the medical profession or, in the case of chiropractic care, not commonly and customarily recognized throughout the chiropractic profession in the United States as appropriate for treatment of accidental bodily injury; or

(3) that portion of a charge for services, products or facilities by a health care provider in excess of the provider's reasonable and customary charge for like services, products or facilities;

K. "motor vehicle" means a self-propelled vehicle of a kind required to be registered pursuant to New Mexico law for use on public streets and highways, other than a vehicle with three or fewer load-bearing wheels;

L. "motor vehicle insurance policy" means that term as defined in Section 59A-7-7.1 NMSA 1978;

M. "noneconomic loss" means a loss other than economic loss;

N. "occupying" means to be in, upon or engaged in the immediate act of entering into or upon or alighting from a motor vehicle;

O. "operation, maintenance or use" means operation, maintenance or use of a motor vehicle as a motor vehicle, including occupying the vehicle, but "operation, maintenance or use" does not include:

(1) conduct in the course of the business of repairing, servicing, washing, selling, maintaining or manufacturing motor vehicles unless the conduct occurs off the business premises; or

(2) conduct in the course of loading or unloading the motor vehicle unless the conduct occurs while engaged in the operation, maintenance or use of the vehicle;

P. "other person responsible for maintaining insurance coverage" means a person with a statutory or contractual responsibility of maintaining insurance coverage on a motor vehicle, including lessees and employees who are responsible for insuring an employer-furnished vehicle;

Q. "pedestrian" means a person not occupying a motor vehicle;

R. "personal compensation benefits" means benefits with an aggregate limit of at least fifteen thousand dollars ($15,000) per person per accident for economic loss resulting from accidental bodily injury, as follows:

(1) medical expenses;

(2) loss of income from work up to two hundred dollars ($200) per week so long as benefits are available under the policy;

(3) if the injured person is not receiving benefits for loss of income from work, replacement services loss up to one hundred dollars ($100) per week so long as benefits are available under the policy; and

(4) a death benefit of fifteen thousand dollars ($15,000) payable to the dependents or, if none, to the estate of the decedent, if death occurs not more than one year after the date of the accident causing the accidental bodily injury;

S. "personal compensation chooser" means a personal compensation insured or a person, other than an owner or operator of an uninsured motor vehicle, who has not exercised his right pursuant to Section 5 of the Personal Choice Auto Insurance Act to reject that act's limitations on tort rights and liabilities;

T. "personal compensation insured" means a person other than a tort chooser who:

(1) is the named insured of a personal compensation policy or a resident relative;

(2) sustains accidental bodily injury while occupying the motor vehicle described on the declarations page of a personal compensation policy; or

(3) with respect to accidents within New Mexico, is a pedestrian who sustains accidental bodily injury through being struck by the motor vehicle described on the declarations page of a personal compensation policy;

U. "personal compensation policy" means an insurance policy or qualified self-insurance plan that provides personal compensation benefits, property damage liability and compulsory financial responsibility coverage applicable in jurisdictions other than New Mexico in at least the minimum limits required by the Personal Choice Auto Insurance Act;

V. "property damage liability" means liability insurance coverage with a limit of at least ten thousand dollars ($10,000) per accident, exclusive of interest and costs, for damage to property in any one accident;

W. "rehabilitation services" means necessary services designed to reduce the disability and dependence of an injured person and to restore the person, to the extent reasonably possible, to his pre-accident level of functioning; X. "replacement services loss" means expenses reasonably incurred for ordinary and necessary services from others in lieu of those the injured person would have performed, not for income but for the benefit of the injured person's family, if he had not been injured. "Replacement services loss" does not include expenses for services performed by any person residing in the household of the injured person, services performed by any person related to the injured person or services performed after the injured person's death;

Y. "resident relative" means a person related to a named insured of a motor vehicle insurance policy by blood, affinity or adoption and who primarily makes his home in the same family unit as the named insured, even though he may temporarily live elsewhere;

Z. "superintendent" means the superintendent of insurance;

AA. "tort chooser" means a person who has exercised his right pursuant to Section 5 of the Personal Choice Auto Insurance Act to reject that act's limitations on tort rights and liabilities;

BB. "tort coverage" means coverage under a motor vehicle bodily injury and property damage liability policy in which a tort chooser involved in an accident with a personal compensation chooser recovers damages from the tort chooser's own insurer for economic and noneconomic loss that the tort chooser is barred from recovering from the personal compensation chooser;

CC. "uncompensated economic loss" means that portion of economic loss arising out of accidental bodily injury that exceeds the total of benefits provided by applicable personal compensation policies and benefits received from all other sources as reimbursement for or arising from accidental bodily injury, other than life insurance benefits, regardless of the nature or number of benefit sources available or their form, but "uncompensated economic loss" does not include:

(1) the amount of economic loss resulting from application of a deductible under a personal compensation policy;

(2) the amount of economic loss that would have been covered under a personal compensation policy providing minimum benefits that the injured person or his resident relative was required to maintain by the Personal Choice Auto Insurance Act but failed to maintain in effect; or

(3) the first fifteen thousand dollars ($15,000) of economic loss sustained by a tort chooser, regardless of whether such loss is recovered from any other source; and

DD. "uninsured motorist" means a person who is the owner of or other person responsible for maintaining insurance coverage on a motor vehicle subject to the insurance requirements of the Mandatory Financial Responsibility Act or the Personal Choice Auto Insurance Act and who fails to maintain the minimum required coverage pursuant to those acts.

Section 4. [NEW MATERIAL] MOTOR VEHICLE INSURANCE REQUIREMENTS.--

A. Every owner or other person responsible for maintaining insurance coverage on a motor vehicle, other than those motor vehicles listed as exempt in Section 66-5-207 NMSA 1978, shall be covered by a personal compensation policy providing personal compensation benefits, property damage liability and compulsory financial responsibility coverage applicable in jurisdictions other than New Mexico in at least the minimum limits required by the Personal Choice Auto Insurance Act, unless the owner or other person responsible for maintaining insurance coverage is a tort chooser.

B. A tort chooser is not eligible for a personal compensation policy and shall comply with the provisions of the Mandatory Financial Responsibility Act by obtaining a motor vehicle bodily injury and property damage liability policy or providing other evidence of financial responsibility. He shall carry tort coverage with limits at least equal to the bodily injury limits injured by that act.

C. The personal compensation policy required by this section may be provided through insurance or a qualified plan of self-insurance approved by the superintendent. The superintendent may approve a self-insurance plan and issue a certificate of self-insurance if the superintendent is satisfied that the plan is actuarially sound and will continue to have sufficient financial assets to respond to claims.

D. The named insured of a personal compensation policy may waive benefits for loss of income from work for an appropriate rate reduction by completing a certification form prescribed by the superintendent stating under oath that neither the named insured or any resident relative has earned income from regular employment during the past thirty days, and that none of them expects to earn income from regular employment for at least one hundred eighty days from the date the certification is executed. A properly completed form shall be conclusive proof of the insured's intent to waive loss of income benefits.

E. Prior to the inception of a personal compensation policy, the insurer shall offer the named insured the additional, optional insurance coverages specified in Subsection F of this section. A named insured's decision to purchase or not to purchase such coverages is binding on all insureds covered by the policy and applies to all renewals and replacement policies until the named insured requests a change.

F. The additional optional insurance coverages required to be made available under a personal compensation policy at additional cost are:

(1) personal compensation benefits covering loss in excess of fifteen thousand dollars ($15,000) per person, in optional increments up to not less than an aggregate limit of one hundred thousand dollars ($100,000) per person per accident. Except as provided in Subsection D of this section, if the aggregate limit is one hundred thousand dollars ($100,000) or more, the sublimit for loss of income from work shall be not less than five hundred dollars ($500) per week;

(2) motor vehicle bodily injury liability insurance with a limit of not less than fifteen thousand dollars ($15,000) per person per accident, exclusive of interest and costs, due to accidental bodily injury and, subject to the per-person limit, an aggregate limit of not less than thirty thousand dollars ($30,000), exclusive of interest and costs; and

(3) scheduled benefits coverage with limits of at least ten thousand dollars ($10,000) per person per accident, in optional increments up to not less than one hundred thousand dollars ($100,000) per person per accident. Scheduled benefits coverage shall provide benefits, payable in addition to and without regard to any other benefits payable, for loss from accidental bodily injury sustained by the named insured of a personal compensation policy or a resident relative who is not a tort chooser while engaged in the operation, maintenance or use of a motor vehicle or as a pedestrian. Scheduled benefits coverage shall be paid as follows, provided that only the largest applicable benefit shall be paid for any one person for a single accident:

(a) loss of life, the principal sum;

(b) permanent and total disability, the principal sum;

(c) loss of two or more members, the principal sum;

(d) loss of one member, one-half of the principal sum;

(e) loss of thumb and index finger on the same hand, one-fourth of the principal sum;

(f) permanent and total loss of hearing, one-half of the principal sum;

(g) permanent and total loss of the sense of smell or taste, one-fourth of the principal sum;

(h) loss of a finger or toe, one-eighth of the principal sum;

(i) serious permanent disfigurement, one-eighth of the principal sum; and

(j) permanent and total loss of use of an internal organ, one-eighth of the principal sum.

G. As used in Paragraph (3) of Subsection F of this section:

(1) "loss" means, with regard to a hand or foot, permanent, complete loss of use of the hand or foot, or actual severance of the hand or foot through or above the wrist or ankle joints; with regard to an eye, complete, irrecoverable loss of sight; with regard to a thumb, permanent, complete loss of use of the thumb or actual severance of the thumb through the proximal phalanx or metacarpal; with regard to the index finger or any other finger, permanent, complete loss of use of the particular finger or actual severance of the particular finger through the middle or proximal phalanx or metacarpal; and with regard to any toe, actual severance through the proximal phalanx or metacarpal of the particular toe;

(2) "member" means hand, foot or eye;

(3) "permanent and total disability" means, for persons who have reached the age of majority or who are working full time at the time of the accidental bodily injury, the insured's complete inability after one year of continuous total disability to engage in an occupation or employment for which the insured is fitted by reason of education, training or experience for the remainder of the insured's life. As used in this paragraph, "continuous total disability" means the insured's complete inability during the first year of disability to perform every duty of the insured's occupation commencing with the thirtieth day after the date of the accident. For persons who are both under the age of majority and not working full time at the time of the accidental bodily injury, "permanent and total disability" means having an abnormal electroencephalography and abnormal brain magnetic resonance image or the presence of seizures for two consecutive years; and

(4) "principal sum" means the coverage limit for scheduled benefits coverage.

H. An insurer may offer:

(1) limits higher than those required by this section;

(2) deductible and coinsurance options for the coverage described in Paragraph (1) of Subsection F of this section;

(3) a limit on the coverage specified in Paragraph (2) of Subsection F of this section on a combined limit basis instead of a split limits basis; and

(4) coverages in addition to those required by this section, including collision and comprehensive physical damage.

I. Any coverages provided pursuant to this section shall be subject to the premium rates, policy forms, terms, limitations, conditions and exclusions approved by the superintendent.

J. The coverages provided pursuant to this section shall be subject to the provisions of Sections 8 and 10 of the Personal Choice Auto Insurance Act.

K. Each insurer shall furnish the first named insured with a card constituting evidence of financial responsibility and proof of insurance; provided, the card shall not be deemed to create insurance coverage if the policy has, in fact, lapsed or been canceled on the date of the accident. The card, insurance policy, insurance policy binder, certificate of insurance or such other proof as may be prescribed by the motor vehicle division of the taxation and revenue department shall constitute sufficient proof of insurance and evidence of financial responsibility for purposes of New Mexico law.

Section 5. [NEW MATERIAL] RIGHT OF REJECTION--UNIFORMITY OF CHOICE.--

A. A person or a resident relative, including a person who is not the owner or other person responsible for maintaining insurance coverage on a motor vehicle, may execute a form prescribed by the superintendent rejecting the limitations on tort rights and liabilities of the Personal Choice Auto Insurance Act and shall file the form with the superintendent, who shall maintain the forms as public records. Rejection is effective with respect to any accident occurring after the date and time the superintendent receives the rejection form. Rejection for a minor or incapacitated person shall be made on his behalf by his parent or guardian and shall remain effective until revoked or until the person is no longer a minor or incapacitated, whichever comes first. Completion and filing of the form prescribed by the superintendent shall be conclusive proof that the person completing the form made an informed and knowledgeable decision concerning rejection. Rejection remains effective until revoked in writing on a form prescribed by the superintendent.

B. Each person so rejecting, if he is the owner or other person responsible for maintaining insurance coverage on a motor vehicle, shall maintain in effect a policy of motor vehicle bodily injury and property damage liability insurance with at least the minimum coverages, including tort coverage, and limits required by the Personal Choice Auto Insurance Act and the Mandatory Financial Responsibility Act.

C. A person who effectively rejects in compliance with Subsections A and B of this section retains all tort rights and tort liabilities to the extent provided in the Personal Choice Auto Insurance Act. The rejecting person is not entitled to collect personal compensation benefits under any motor vehicle insurance policy unless he has subsequently revoked the rejection as provided in Subsection D of this section.

D. Revocation of rejection forms shall be made on a form prescribed by the superintendent. Revocation becomes effective as of the date and time the superintendent receives it. Revocation remains effective until superseded by the filing of a rejection form. Regardless of the nonfiling of subsequent revocation forms, a person eligible for payment of personal compensation benefits as a named insured under a personal compensation policy shall be deemed to have withdrawn any rejection.

E. In order to minimize conflict in choices between personal compensation choosers and tort choosers, insurers are authorized to maintain underwriting rules that require uniformity of choice by the named insured and all resident relatives.

F. The superintendent shall adopt and promulgate rules governing:

(1) rejection and revocation of such rejection pursuant to this section, including situations involving multiple vehicles and multiple policies in the same household; and

(2) a system for maintaining and providing access to forms filed pursuant to this section.

Section 6. [NEW MATERIAL] CONSUMER INFORMATION

PROGRAM.--

A. The superintendent shall establish and maintain a program to inform consumers about the comparative costs of a personal compensation policy and a motor vehicle bodily injury and property damage liability policy, including with the latter required minimum uninsured motorist coverage, as well as the benefits, rights and responsibilities under each type of insurance. The program shall include procedures for informing insureds of their right of rejection.

B. The superintendent shall prepare a budget reflecting costs associated with carrying out his responsibilities under the Personal Choice Auto Insurance Act. The superintendent's budgeted costs shall be assessed annually to all motor vehicle insurers doing business in New Mexico pro rata on the basis of earned premium reported for the preceding calendar year.

C. A person, after being provided information in a form approved by the superintendent explaining the basis for choosing between being a personal compensation chooser and a tort chooser, shall be bound to the terms of the status and coverage chosen and is precluded from claiming liability against another person based on being inadequately informed.

Section 7. [NEW MATERIAL] APPLICATION OF PERSONAL COMPENSATION BENEFITS AND COVERAGES TO OTHER JURISDICTIONS.--

A. A personal compensation policy shall pay personal compensation benefits for accidental bodily injury of a personal compensation insured sustained within the United States, its territories or possessions or Canada.

B. A personal compensation policy shall, if an insured becomes subject to a compulsory financial responsibility or similar law of another jurisdiction of the United States, its territories or possessions or Canada, provide the coverage required by the law of that jurisdiction.

Section 8. [NEW MATERIAL] PERSONS NOT ENTITLED TO PERSONAL COMPENSATION BENEFITS--LIMITATIONS ON PERSONAL COMPENSATION BENEFITS.--

A. Notwithstanding any other provision of the Personal Choice Auto Insurance Act, an insurer is not obligated to provide personal compensation benefits for any injured person who:

(1) was injured in a motor vehicle accident while committing a felony or while voluntarily operating or occupying a vehicle known by him to be stolen;

(2) was injured while engaged in the operation, maintenance or use of a motor vehicle owned by, furnished to or available for the regular use of the injured person, or a resident relative of the injured person, if such motor vehicle is not covered by the policy against which a claim is made;

(3) was injured as a pedestrian by a motor vehicle owned by, furnished to or available for the regular use of the injured person, or a resident relative of the injured person, if the motor vehicle is not covered by the policy against which a claim is made;

(4) was injured as a result of his intentional misconduct. If a person dies as a result of his intentional misconduct, the insurer is not obligated to provide the person's dependents and estate his personal compensation benefits;

(5) was an uninsured motorist at the time of the accident causing the injuries. As used in this paragraph, "uninsured motorist" means a person who is the owner of or other person responsible for maintaining insurance coverage on a motor vehicle pursuant to the Personal Choice Auto Insurance Act but who has failed to maintain the coverage;

(6) was injured while operating or occupying a motor vehicle involved in an organized race or speed contest; or

(7) is a tort chooser.

B. There shall be no coverage for the named insured or any resident relative under a personal compensation policy while operating or occupying a self-propelled vehicle with three or fewer load-bearing wheels.

C. An insurer shall not be obligated to pay personal compensation benefits, other than medical payments, to or on behalf of any injured person who was driving under the influence of intoxicating liquor or drugs.

D. Nothing in this section bars an insurer from providing personal compensation benefits for any injured person, otherwise excluded by this section, if the policy clearly states that it provides the coverage.

Section 9. [NEW MATERIAL] PAYMENT OF PERSONAL COMPENSATION BENEFITS.--Personal compensation benefits are payable to any one of the following:

A. the injured person;

B. the parent or guardian of the injured person, if the injured person is a minor or incapacitated;

C. a dependent or the personal representative of the estate of the injured person; or

D. any person providing medical or other health care services, products or facilities for which payment is due.

Section 10. [NEW MATERIAL] PRIORITY OF BENEFITS.--

A. Personal compensation policies are liable to pay personal compensation benefits in the following order of priority up to their respective coverage limits:

(1) the personal compensation policy covering a motor vehicle involved in the accident, if the injured person was engaged in the operation, maintenance or use of the motor vehicle or was a pedestrian injured by the motor vehicle at the time of the accident;

(2) a personal compensation policy under which the injured person is a named insured;

(3) a personal compensation policy under which the injured person is a resident relative; and

(4) a personal compensation policy under which the injured person qualifies as a personal compensation insured other than as described in Paragraphs (1) through (3) of this subsection.

B. Subject to the payment priorities in Subsection A of this section, if a personal compensation insured is entitled to benefits under more than one personal compensation policy or coverage, the maximum recovery shall not exceed the amount payable under the personal compensation policy with the highest limit.

C. If two or more insurers are obligated to pay personal compensation benefits at the same priority, the insurer against whom the claim is first made shall pay the claim up to that insurer's policy limits as if wholly responsible and may thereafter recover contribution pro rata on the basis of coverage limits from any other insurer at the same priority level.

D. For purposes of payment of personal compensation benefits only, an unoccupied, parked motor vehicle is not a motor vehicle involved in an accident unless it was parked in such a way as to cause unreasonable risk of injury.

Section 11. [NEW MATERIAL] COORDINATION OF BENEFITS.--The personal compensation insurer has the primary obligation to indemnify its personal compensation insured who sustains accidental bodily injury; provided that personal compensation benefits are excess over and shall not duplicate the amount of benefits an injured person recovers, or is entitled to recover, under a state or federal workers' compensation law or similar occupational injury law, based on the same accidental bodily injury.

Section 12. [NEW MATERIAL] LIMITATION ON PAYMENT OF INCURRED MEDICAL EXPENSE.--Personal compensation benefits do not include:

A. medical expenses incurred for treatment of accidental bodily injury when the injury is first discovered and treated more than one year after the date of the accident;

B. medical expenses incurred for treatment occurring more than one year after the most recently occurring previous treatment for that accidental bodily injury; or

C. loss of income or replacement services loss accruing more than one year after the most recently occurring previous treatment for the accidental bodily injury.

Section 13. [NEW MATERIAL] LIMITATIONS ON TORT RIGHTS AND LIABILITIES--CLAIMS FOR UNCOMPENSATED ECONOMIC LOSS.--

A. Except as provided otherwise in Subsections D and E of this section:

(1) no person, other than a tort chooser, shall have a cause of action in tort or otherwise for accidental bodily injury caused in whole or in part by the operation, maintenance or use of a motor vehicle subject to the Personal Choice Auto Insurance Act, other than for uncompensated economic loss; and

(2) a tort chooser shall have no cause of action in tort or otherwise against a personal compensation chooser for accidental bodily injury caused in whole or in part by the operation, maintenance or use of a motor vehicle subject to the Personal Choice Auto Insurance Act, other than for uncompensated economic loss.

B. Subject to the provisions of Subsection A of this section and except as provided otherwise in Subsections D and E of this section, an uninsured motorist shall not have a cause of action to recover damages resulting from an accident arising out of the operation, maintenance or use of a motor vehicle from a personal compensation chooser or a tort chooser for:

(1) the first fifteen thousand dollars ($15,000) of economic loss resulting from accidental bodily injury; or

(2) the first ten thousand dollars ($10,000) of property damage.

C. As used in this section, "uninsured motorist" means a person who is the owner of or other person responsible for maintaining insurance coverage on a motor vehicle subject to the insurance requirements of the Personal Choice Auto Insurance Act, but who fails to maintain the minimum required coverages.

D. Any person shall have a cause of action under common law tort principles for economic and noneconomic loss against any other person who causes accidental bodily injury or motor vehicle property damage while committing a felony or while driving under the influence of intoxicating liquor or drugs. Insurers are prohibited from paying the damages assessed against an insured pursuant to this subsection, except for economic loss.

E. Any person shall have a cause of action under common law tort principles for economic and noneconomic loss resulting from accidental bodily injury or property damage caused by intentional misconduct of another person. Insurers are prohibited from paying damages assessed against an insured pursuant to this subsection.

F. The limitations of causes of action in tort or otherwise specified in Subsections A and B of this section apply only to:

(1) an individual engaged in the operation, maintenance or use of a vehicle at the time of the accident; or

(2) a person whose relationship to the individual described in Paragraph (1) of this subsection created liability for that person by operation of law.

Section 14. [NEW MATERIAL] CLAIMS FOR UNCOMPENSATED ECONOMIC LOSS--SETTLEMENT PERIOD--ATTORNEY FEES.--

A. Any claimant seeking recovery for uncompensated economic loss from another person, as authorized by the Personal Choice Auto Insurance Act, shall make demand for settlement in writing, accompanied by supporting documentation and all relevant bills and employer records, to the person or the person's insurer at least thirty days before filing any lawsuit seeking damages against the person. The person against whom the claim is made or his insurer shall reply in writing to the demand prior to the last day of the settlement period, or the person shall be deemed to have made no offer. If any applicable statute of limitation would otherwise run during the thirty-day settlement period, that statute of limitation shall be tolled until the end of the second business day after the last day of the settlement period. The thirty-day settlement period shall begin to run on the day the written demand is mailed or otherwise delivered.

B. If the claimant is unable to reach an agreement with the person against whom the claim is made or the person's insurer by the last day of the settlement period, the claimant shall be entitled to file a lawsuit seeking uncompensated economic loss based on common law tort principles. If the claimant is deemed the prevailing party in the lawsuit as provided in this subsection, he shall, in addition to any damages awarded, be awarded reasonable attorney fees, not to exceed one-third of the gross amount of the recovery, exclusive of interest and court costs; provided that if the gross recovery exceeds one hundred thousand dollars ($100,000), the maximum fee shall be limited to one-third of the amount up to one hundred thousand dollars ($100,000) plus fifteen percent of the amount in excess of one hundred thousand dollars ($100,000). The claimant shall be deemed to be the prevailing party if he is awarded damages, exclusive of interest and court costs, in an amount equal to or greater than the midpoint between the last written demand made during the settlement period by the claimant and the last written offer made during the settlement period by the person against whom the claim is made or the person's insurer.

C. Nothing in this section shall be deemed to prohibit the parties from compromising a claim at any time by mutual agreement.

Section 15. [NEW MATERIAL] RIGHT OF SUBROGATION--CONDITIONS.--An insurer shall be subrogated, to the extent of any personal compensation benefits paid, to all of the rights of its insured with respect to an accident caused, in whole or in part, by the fault of any person who is not a personal compensation chooser.

Section 16. [NEW MATERIAL] PAYMENT OF INSURANCE BENEFITS--CAUSES OF ACTION.--

A. No offset shall be allowed against personal compensation benefits due based on the value of a cause of action until after a monetary recovery is made. After recovery is made, a deduction from future benefits may be made in no more than the amount of the net recovery, exclusive of attorney fees, expenses and costs incurred in effecting the recovery.

B. If personal compensation benefits have been received, the insurer may require the recipient to repay, out of such recovery, an amount equal to the personal compensation benefits received but not more than the net recovery, exclusive of attorney fees, expenses and costs incurred in effecting the recovery. Any remainder of the net recovery shall be credited periodically against loss as it accrues, until an amount equal to the net recovery has been deducted. The insurer shall have a lien on the recovery equal to net personal compensation benefits received.

C. Recovery on a cause of action shall not operate to reduce personal compensation benefit coverage limits, which shall be paid out in full to the extent economic loss exceeds the amount of recovery.

Section 17. [NEW MATERIAL] PERSONAL COMPENSATION BENEFITS--PROMPT PAYMENT.--

A. Personal compensation benefits shall be paid as loss accrues. Loss accrues when medical expense, loss of income from work or replacement services loss occurs or when the injured person dies. Notwithstanding any provision of the New Mexico Insurance Code, personal compensation benefits for accrued losses are overdue if not paid within thirty days after the insurer receives reasonable proof of the fact and the amount of loss; provided that an insurer may accumulate claims for periods not exceeding thirty days, in which case benefits are not overdue if paid within twenty days after the last day of the period of accumulation. If reasonable proof is not supplied as to the entire claim, the amount that is supported by reasonable proof shall be paid promptly as provided in this subsection, and any part of the remainder of the claim that is later supported by reasonable proof shall be paid promptly in the same manner.

B. For the purpose of calculating the extent to which personal compensation benefits are overdue, payment shall be treated as made on the date a draft or other valid instrument is placed in the United States mail in a properly addressed postpaid envelope or, if not mailed, on the date of personal delivery to the insured.

C. Notwithstanding any provision of the New Mexico Insurance Code, if an insurer is found after an administrative hearing by the superintendent or upon review by a court of competent jurisdiction to be in violation of this section, the exclusive remedy shall be the recovery of the personal compensation benefits and interest at a rate of twelve percent a year beginning from the date the benefits were due, together with reasonable attorney fees, expenses and costs. In the event of an insurer's willful or wanton failure to comply with this section, the recovery shall be three times the amount of the personal compensation benefits that are overdue, together with attorney fees, expenses and costs.

Section 18. [NEW MATERIAL] ASSIGNMENT OR GARNISHMENT--PERSONAL COMPENSATION BENEFITS EXEMPT.--

A. Personal compensation benefits are exempt from garnishment, attachment, execution or any other process or claim to the extent that wages or earnings are exempt under any applicable law.

B. An agreement for assignment of any right to personal compensation benefits payable in the future shall be unenforceable except to the extent that:

(1) benefits are for the cost of medical or other health care services, products or facilities provided or to be provided by the assignee; or

(2) benefits for loss of income from work or replacement services loss are assigned for payment of alimony, maintenance or child support.

Section 19. [NEW MATERIAL] LIMITATION OF ACTIONS.--

A. Subject to the arbitration provisions in Section 24 of the Personal Choice Auto Insurance Act, if no personal compensation benefits have been paid, an action therefor may not be commenced against the insurer later than two years after the date of the accident causing the injuries.

B. Subject to the arbitration provisions in Section 24 of the Personal Choice Auto Insurance Act, if personal compensation benefits have been paid, an action for recovery of further personal compensation benefits may be commenced no later than two years after the date of the last payment of personal compensation benefits; provided that no action for personal compensation benefits shall be commenced against an insurer more than four years after the date of the accident.

C. The statute of limitations period for personal injury provided in Section 37-1-8 NMSA 1978 shall, for a cause of action for uncompensated economic loss under the Personal Choice Auto Insurance Act, commence on the day after the insured has incurred economic loss in excess of fifteen thousand dollars ($15,000) or the insured has exhausted his policy limits, whichever is earlier.

Section 20. [NEW MATERIAL] MENTAL AND PHYSICAL EXAMINATIONS.--

A. If the mental or physical condition of an injured person is material to any claim that has been or may be made for personal compensation benefits, the injured person, upon request of an insurer, shall submit to reasonable mental or physical examination by a health care provider designated by the insurer at a reasonably convenient time and location, subject to rules, if any, adopted and promulgated by the superintendent. The cost of any such examination shall be borne by the insurer and shall not be charged against or operate to reduce benefit limits.

B. If an insurer has requested in writing that an injured person submit to mental or physical examination pursuant to Subsection A of this section and the person refuses to comply, the insurer may, upon at least thirty days' prior written notice to the insured, suspend all future personal compensation benefits and cease payment of any incurred but unpaid portion of bills for services, which such examination is intended to verify as medically necessary, until the injured person complies with the request.

Section 21. [NEW MATERIAL] EMPLOYER AND PROVIDER REQUIREMENTS--MEDICAL EXPENSE REVIEW.--

A. Upon request of an insurer, an employer shall furnish a statement of the work record and earnings of an injured person who has filed a claim for personal compensation benefits. The statement shall cover the period specified by the insurer and may include the one-year period before, and the entire period after, the date of the accident.

B. To ensure that the treatment and expenses are both reasonable and necessary, insurers may review or obtain a review of treatment and expenses prior to, during and after the course of treatment of an injured person.

C. Every medical or other health care provider providing, before or after an injury upon which a claim for personal compensation benefits is based, any services, products or facilities in relation to that or any other injury, or in relation to a condition claimed to be connected with that or any other injury, shall, upon request of the insurer against whom the claim has been made, furnish the insurer a written report of the history, condition, treatment and dates and costs of treatment of the injured person. The information shall be provided with a declaration that the services, products or facilities rendered were reasonable and necessary with respect to the injury sustained and shall identify which expenses were incurred as a result of the injury. Each medical or other health care provider shall also produce in a timely manner and permit the inspection and copying of its records regarding such history, condition, treatment and the dates and costs thereof. The person providing the declaration required under this section shall attest to it as follows: "I declare that I have read the foregoing and the facts alleged are true, to the best of my knowledge and belief.". The cost of obtaining the information and records required by this subsection shall be borne by the insurer and shall not be charged against or operate to reduce benefit limits.

D. No cause of action for violation of the physician-patient privilege or invasion of the right of privacy shall exist against any medical or other health care provider complying with the provisions of this section, but the insurer is responsible for ensuring the confidentiality of the records in the hands of its officers, employees and agents.

E. A dispute regarding the right to the discovery of facts about an injured person by the insurer may be resolved through arbitration as provided in Section 24 of the Personal Choice Auto Insurance Act or in court proceedings.

Section 22. [NEW MATERIAL] ASSIGNED CLAIMS PLAN.--

A. Insurers, other than self-insurance plans, authorized to provide insurance under the Personal Choice Auto Insurance Act shall organize, participate in and maintain an assigned claims plan to provide benefits equivalent to the minimum personal compensation benefits required by that act to an injured person covered by that act if the person is not a tort chooser or a resident relative of an uninsured motorist as defined in Paragraph (5) of Subsection A of Section 8 of that act and if:

(1) personal compensation benefits are unavailable, for a reason other than as specified in Section 8 of that act; or

(2) personal compensation benefits are unavailable because of the insolvency of an insurer for whose covered claims the New Mexico property and casualty insurance guaranty association is not responsible.

B. The assigned claims plan shall adopt bylaws and rules, and enter into necessary agreements for the operation of the plan and the equitable distribution of costs, as approved by the superintendent.

C. Any claim brought through the assigned claims plan shall be assigned to an insurer in accordance with the plan's bylaws and rules. Upon such assignment, the insurer shall have the rights and obligations it would have had if, prior to such assignment, it had issued a personal compensation policy providing the minimum personal compensation coverage required by law.

D. Any person accepting personal compensation benefits under the assigned claims plan shall have the rights and obligations the person would have had under a personal compensation policy issued to him providing the minimum personal compensation coverage required by law.

E. Benefits available through the assigned claims plan shall be reduced to the extent that benefits covering the same loss are available from other sources, regardless of the nature or number of benefit sources available and regardless of the nature or form of the benefits. The plan coverage shall be deemed secondary to those sources.

F. The assigned claims plan and the insurer to whom the claim is assigned are subrogated, to the extent of personal compensation benefits paid for a loss, to all of the rights of the claimant against any person liable for the loss and against any insurer, its successor in interest or any other person or organization legally obligated to provide personal compensation benefits to the injured person for the loss.

Section 23. [NEW MATERIAL] INCENTIVES FOR INSUREDS.--Each insurer shall adopt an actuarially sound program that provides incentives to a personal compensation chooser in the form of increased benefits, reduced premiums or other methods to:

A. purchase motor vehicles equipped with automatic seat and harness belts or air bags, but the incentives shall not include a provision for a loss of coverage or benefits for failure to use the devices; and

B. have medical expense benefits delivered by a managed care program designated by the insurer, but only the actual cost of the benefits to the insurer shall be charged against the policy limits.

Section 24. [NEW MATERIAL] RULES.--The superintendent may adopt and promulgate rules necessary to provide for the effective implementation and administration of the Personal Choice Auto Insurance Act that are consistent with its purposes.

Section 25. [NEW MATERIAL] ARBITRATION.--

A. Any dispute with respect to personal compensation benefits between an insurer and an injured person, or the dependents or estate of such person, may be submitted to arbitration pursuant to the provisions of this section if the insurer and the person agree. Only the dispute that the parties have agreed to arbitrate may be addressed by the arbitration.

B. Upon agreement for arbitration, the parties may agree on a single arbitrator or, if no such agreement can be reached, each party shall select a competent arbitrator, and the two arbitrators so named shall select a third arbitrator. If unable to agree on the third arbitrator within thirty days, either party may request a judge of the district court in the county in which the arbitration is pending to select the third arbitrator. The written decision of the arbitrator, or any two arbitrators if a panel of three is used, shall be binding on each party.

C. The cost of any arbitrator or any expert witness selected by one party shall be paid by that party. The cost of any arbitrator agreed upon by the parties or their arbitrators and other expenses of arbitration shall be shared equally by both parties.

D. The arbitration shall take place in the county in which the insured resides unless the parties agree to another location. The Rules of Civil Procedure for the District Courts and the Rules of Evidence shall apply.

Section 26. [NEW MATERIAL] OUT-OF-STATE VEHICLES.--

A. Each insurer doing business in New Mexico shall file with the superintendent, as a condition of its continued transaction of business, a form approved by the superintendent declaring that any contract of primary motor vehicle insurance, wherever issued, covering the operation, maintenance or use of a motor vehicle shall be deemed, while the motor vehicle is in New Mexico, to provide at least the minimum benefits required for a personal compensation policy by the Personal Choice Auto Insurance Act. The insured under any such policy is deemed to have elected coverage under a personal compensation policy, and to have accepted the limitations on tort rights and liabilities of the Personal Choice Auto Insurance Act.

B. The provisions of this section do not apply to any named insured who, prior to a motor vehicle accident within New Mexico, has become a tort chooser pursuant to Section 5 of the Personal Choice Auto Insurance Act. With respect to such a tort chooser, the bodily injury and property damage liability limits of the policy shall be operative, subject to conformance with the Mandatory Financial Responsibility Act.

Section 27. Section 59A-7-7 NMSA 1978 (being Laws 1984, Chapter 127, Section 113) is amended to read:

"59A-7-7. "VEHICLE" INSURANCE DEFINED.--"Vehicle" insurance is insurance covering:

A. physical damage. Insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal resulting from or incident to ownership, maintenance or use of any such vehicle, aircraft or animal;

B. public liability and property damage. Insurance against any hazard or cause, and against any loss, liability or expense resulting from or incident to ownership, maintenance or use of any such vehicle, aircraft or animal;

C. cargo. Insurance against loss of or damage to property contained in a vehicle or being loaded or unloaded therein or therefrom or incident to the ownership, maintenance or use of any such vehicle, aircraft or animal; [and]

D. medical payments. Insurance for payment on behalf of the injured party or for reimbursement of the insured for payment, irrespective of legal liability of the insured, of medical, hospital, surgical and disability benefits, to persons injured and funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed as the result of an accident, resulting from or incident to ownership, maintenance or use of any such vehicle, aircraft or animal. Such coverage shall not be deemed to be "health" insurance for purposes of the Insurance Code; and

E. the risks and providing the benefits described in the Personal Choice Auto Insurance Act."

Section 28. A new Section 59A-7-7.1 NMSA 1978 is enacted to read:

"59A-7-7.1. [NEW MATERIAL] "MOTOR VEHICLE INSURANCE POLICY" DEFINED.--"Motor vehicle insurance policy" means a policy of vehicle insurance that covers self-propelled vehicles of a kind required to be registered under New Mexico law for use on public streets and highways and:

A. shall include either:

(1) a motor vehicle bodily injury and property damage liability policy in compliance with the Mandatory Financial Responsibility Act, together with uninsured motorist coverage, subject to the provisions of Section 66-5-301 NMSA 1978 permitting the insured to reject the coverage; or

(2) a personal compensation policy as defined in the Personal Choice Auto Insurance Act; and

B. may include:

(1) physical damage coverage;

(2) medical payments coverage; and

(3) other coverages that the insured and the insurer agree to include within the policy."

Section 29. Section 59A-32-3 NMSA 1978 (being Laws 1984, Chapter 127, Section 521) is amended to read:

"59A-32-3. PURPOSE OF ASSIGNED RISK PLAN.--The purpose of the assigned risk plan is to provide for the equitable distribution and apportionment among insurers authorized to transact in this state the business of [automobile and] personal compensation, motor vehicle bodily injury, property damage liability and physical damage insurance, of insurance afforded applicants who are in good faith entitled to, but who are unable to procure, such insurance through ordinary methods."

Section 30. Section 59A-32-5 NMSA 1978 (being Laws 1984, Chapter 127, Section 523) is amended to read:

"59A-32-5. REQUIREMENTS OF ASSIGNED RISK PLANS.--[Any such] An agreement or plan for the assignment of risks involving [automobile and] personal compensation, motor vehicle bodily injury, [and] property damage liability and physical damage insurance shall include provision for:

A. reasonable rules governing the equitable distribution of risks by direct insurance, reinsurance or otherwise, and by the assignment of risks to insurers participating in the plan;

B. rates and reasonable rate modifications, which shall be applicable to such risks and which shall not be excessive, inadequate or unfairly discriminatory;

C. the coverage limits [of liability which] that any insurer to [whom] which a risk is assigned shall be required to assume; and

D. a method whereby applicants for insurance, persons insured and insurers under the plan may have a hearing on grievances and the right to appeal from the decision on [any such] a grievance to the superintendent."

Section 31. Section 59A-32-6 NMSA 1978 (being Laws 1984, Chapter 127, Section 524) is amended to read:

"59A-32-6. REVIEW OF PROPOSED ASSIGNED RISK PLANS.--Every [such] plan for the assignment of risks involving [automobile and] personal compensation, motor vehicle bodily injury, [and] property damage liability and physical damage insurance shall be filed in writing with the superintendent. The superintendent shall review the plan as soon as reasonably possible after filing, to determine whether or not it meets the requirements of Section [523 of this article] 59A-32-5 NMSA 1978. Each plan shall be on file with the superintendent for a waiting period of thirty [(30)] days before it becomes effective, unless sooner approved in writing. Unless disapproved in writing by the superintendent within the thirty [(30)] day waiting period, a plan shall be deemed approved and shall become effective upon the expiration of that period."

Section 32. Section 59A-32-8 NMSA 1978 (being Laws 1984, Chapter 127, Section 526) is amended to read:

"59A-32-8. FAILURE TO FILE PLAN--ASSIGNED RISK PLAN PRESCRIBED.--If no plan [which] that meets the requirements of Section [523 of this article above] 59A-32-5 NMSA 1978 has been filed with the superintendent within ninety [(90)] days after [June 30, 1959] the effective date of the Personal Choice Auto Insurance Act, or within the period stated in [any] an order [which] that disapproves an existing plan, the superintendent may formulate and prescribe a plan [which] that does meet [such] those requirements, after hearing or consultation with insurers authorized to transact in this state the business of [automobile and] personal compensation, motor vehicle bodily injury, [and] property damage liability and physical damage insurance. When [any] a plan [or plans] or amendment [thereto] to it has [or have] been approved or prescribed, no insurer to which [such] the plan is applicable shall thereafter issue [any] a policy of [such] insurance, or undertake to transact [such] business in this state, unless the insurer participates in [such] the plan."

Section 33. Section 66-5-208 NMSA 1978 (being Laws 1978, Chapter 35, Section 282, as amended) is amended to read:

"66-5-208. EVIDENCE OF FINANCIAL RESPONSIBILITY--AMOUNTS AND CONDITIONS.--["Evidence of financial responsibility"] As used in the Mandatory Financial Responsibility Act, "evidence of financial responsibility" means:

A. evidence of the ability to respond in damages for liability, on account of accidents occurring subsequent to the effective date of the evidence, arising out of the ownership, maintenance or use of a vehicle of a type subject to registration under the laws of New Mexico, in the following amounts:

[A. twenty-five thousand dollars ($25,000)] (1) fifteen thousand dollars ($15,000) because of bodily injury to or death of one person in [any one] a single accident;

[B.] (2) subject to [this] the limit for one person, [fifty thousand dollars ($50,000)] thirty thousand dollars ($30,000) because of bodily injury to or death of two or more persons in [any one] a single accident;

[C.] (3) ten thousand dollars ($10,000) because of injury to or destruction of property of others in [any one] a single accident; and

[D.] (4) if evidence is in the form of a surety bond or a cash deposit, the total amount shall be [sixty thousand dollars ($60,000)] forty thousand dollars ($40,000); or

B. evidence of a valid personal compensation policy as specified in the Personal Choice Auto Insurance Act."

Section 34. Section 66-5-209 NMSA 1978 (being Laws 1978, Chapter 35, Section 283, as amended) is amended to read:

"66-5-209. MEANING OF "JUDGMENT".--["Judgment"] As used in the Mandatory Financial Responsibility Act, "judgment" means any judgment [which] that becomes final by expiration without appeal of the time within which an appeal might have been perfected or by final affirmation on appeal rendered by a court of competent jurisdiction of any state or of the United States, upon a cause of action, as limited by the Personal Choice Auto Insurance Act, arising out of the ownership, maintenance or use of any motor vehicle of a type subject to registration [under] pursuant to the laws of New Mexico, for damages, including damages for care and loss of services, because of bodily injury to or death of any person or for damages because of injury to or destruction of property, including [the] its loss of use, [thereof] or upon a cause of action on an agreement of settlement for such damages. "Judgment" does not include any amount recoverable as uncompensated economic loss pursuant to the Personal Choice Auto Insurance Act."

Section 35. Section 66-5-215 NMSA 1978 (being Laws 1978, Chapter 35, Section 298, as amended) is amended to read:

"66-5-215. PAYMENTS SUFFICIENT TO SATISFY REQUIREMENTS.--

A. Judgments herein referred to shall, for the purpose of the Mandatory Financial Responsibility Act only, be deemed satisfied when:

(1) [twenty-five thousand dollars ($25,000)] fifteen thousand dollars ($15,000) has been credited upon any judgment or judgments rendered in excess of that amount because of bodily injury to or death of one person as the result of any one accident;

(2) subject to the limit of [twenty-five thousand dollars ($25,000)] fifteen thousand dollars ($15,000) because of bodily injury to or death of one person, the sum of [fifty thousand dollars ($50,000)] thirty thousand dollars ($30,000) has been credited upon any judgment [or judgments] rendered in excess of that amount because of bodily injury to or death of two or more persons as the result of any one accident; or

(3) ten thousand dollars ($10,000) has been credited upon any judgment [or judgments] rendered in excess of that amount because of injury to or destruction of property of others as a result of any one accident.

B. However, payments made in settlements of any claims because of bodily injury, death or property damage arising from the accident shall be credited in reduction of the amounts provided for in this section."

Section 36. Section 66-5-224 NMSA 1978 (being Laws 1978, Chapter 35, Section 309, as amended) is amended to read:

"66-5-224. ACT NOT TO AFFECT OTHER POLICIES.--

A. The Mandatory Financial Responsibility Act does not apply to or affect policies of motor vehicle insurance [against liability which] that may now or hereafter be required by any other law of New Mexico, except the Personal Choice Auto Insurance Act, and such policies, if they contain an agreement or are endorsed to conform with the requirements of the Mandatory Financial Responsibility Act, may be considered as evidence of financial responsibility [under] pursuant to that act.

B. The Mandatory Financial Responsibility Act does not apply to or affect policies insuring solely the insured named in the policy against liability resulting from the maintenance or use by persons in the insured's employ or on his behalf of motor vehicles not owned by the insured."

Section 37. Section 66-5-226 NMSA 1978 (being Laws 1955, Chapter 182, Section 330, as amended) is amended to read:

"66-5-226. CASH DEPOSIT AS EVIDENCE.--Evidence of financial responsibility may be demonstrated by the certificate of the state treasurer that the person named in the certificate has deposited with him [sixty thousand dollars ($60,000)] forty thousand dollars ($40,000) in cash."

Section 38. Section 66-5-301 NMSA 1978 (being Laws 1978, Chapter 35, Section 325, as amended) is amended to read:

"66-5-301. INSURANCE AGAINST UNINSURED AND UNKNOWN MOTORISTS--REJECTION OF COVERAGE BY THE INSURED.--

A. No motor vehicle [or automobile] bodily injury and property damage liability policy [insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person and for injury to or destruction of property of others arising out of the ownership, maintenance or use of a motor vehicle] shall be delivered or issued for delivery in New Mexico with respect to any motor vehicle registered or principally garaged in New Mexico unless coverage is provided therein or supplemental thereto in minimum limits for bodily injury or death and for injury to or destruction of property as set forth in Section 66-5-215 NMSA 1978 and such higher limits as may be desired by the insured, but up to the limits of liability specified in bodily injury and property damage liability provisions of the insured's policy, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, and for injury to or destruction of property resulting therefrom according to the rules and regulations promulgated by, and under provisions filed with and approved by, the superintendent of insurance.

B. The uninsured motorist coverage described in Subsection A of this section shall include underinsured motorist coverage for persons protected by an insured's policy. For the purposes of this subsection, "underinsured motorist" means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage. [No motor vehicle or automobile liability policy sold in New Mexico shall be required to include underinsured motorist coverage until January 1, 1980.] A personal compensation insured under the Personal Choice Auto Insurance Act is not an underinsured motorist except to the extent a claim is made for uncompensated economic loss against the motorist, as provided in that act, that exceeds the coverage limit under the personal compensation policy.

C. The uninsured motorist coverage shall [provide an exclusion] exclude coverage of not more than the first two hundred fifty dollars ($250) of loss resulting from injury to or destruction of property of the insured in any one accident. The named insured shall have the right to reject uninsured motorist coverage [as] described in [Subsections A and B of] this section [provided that] but, unless the named insured requests [such] that coverage in writing, [such coverage] it need not be provided in or supplemental to a renewal policy where the named insured has rejected the coverage in connection with a policy previously issued to him by the same insurer."

Section 39. TEMPORARY PROVISION--TRANSITION OF RENEWAL POLICIES.--Each motor vehicle insurance policy in effect on the effective date of the Personal Choice Auto Insurance Act shall become subject to the provisions of that act on its first succeeding renewal date. At least thirty days before the policy renewal date, the motor vehicle insurer shall notify the policyholder of the new limitations on tort rights and liabilities and shall provide information on obtaining the appropriate form to reject the limitations. At that time, the motor vehicle insurer shall also afford the policyholder the opportunity to purchase the optional coverages specified in Section 4 of the Personal Choice Auto Insurance Act. If the policyholder does not request any optional coverage prior to the renewal date of the policy and does not inform the insurer that he is a tort chooser, the policy shall be reissued as a personal compensation policy with personal compensation benefits equal to the medical payments coverage previously selected by the insured, but in no event less than fifteen thousand dollars ($15,000). If the insurer does not offer personal compensation benefits in an amount equal to the insured's previous medical payments limit, then the insurer shall provide the available limit that is nearest, but not less than, the previous medical payments limit. All other coverages previously purchased by a named insured shall remain in effect; provided that motor vehicle insurers may delete any coverage that would substantially duplicate personal compensation benefits, including uninsured motorist coverage and disability coverage. If the policyholder requests any optional coverage, the requested coverage shall be effective on the reissue date of the policy if the request is received by the motor vehicle insurer prior to the renewal date of the policy. If received on or after the reissue date, the requested coverage shall be effective at 12:01 a.m. on the day after the request is received.

Section 40. TEMPORARY PROVISION--COST SAVINGS TO CONSUMERS--CONDITIONAL REPEAL.--

A. Each motor vehicle insurer that writes motor vehicle insurance policies shall file policy forms and rates for personal compensation policies and motor vehicle liability policies, including tort coverage, with the superintendent of insurance no later than sixty days before the effective date of the provisions of the Personal Choice Auto Insurance Act, for review and approval pursuant to Chapter 59A, Article 17 NMSA 1978.

B. Each motor vehicle insurer's statewide average premium for a personal compensation policy with minimum required benefits during the first year following the effective date of the Personal Choice Auto Insurance Act shall be at least thirty percent less than the motor vehicle insurer's statewide average premium for calendar year 1998 for mandatory insurance coverage, unless the motor vehicle insurer first demonstrates at a rate hearing that such a decrease will result in inadequate rates. For the purposes of this subsection, "mandatory insurance coverage" means the minimum limits for bodily injury and property damage liability set forth in Section 66-5-215 NMSA 1978 immediately prior to the effective date of this act and the minimum uninsured and underinsured motorist coverage set forth in Section 66-5-301 NMSA 1978.

C. If a combination of insurers selling more than fifty percent of the automobile insurance in this state, as measured by direct earned premium for calendar year 1998, cannot reduce their premiums as required by Subsection B of this section, because such a reduction would result in inadequate rates as determined by the superintendent of insurance, this act is repealed effective one year after the effective date of its provisions.

D. Prior to the effective date of the provisions of the Personal Choice Auto Insurance Act, the superintendent of insurance may adopt and promulgate rules, approve proposed policy forms and review and approve motor vehicle insurance rates for coverages to be made available under that act.

Section 41. SEVERABILITY.--

A. Except as provided otherwise in Subsection B of this section, if any provision of the Personal Choice Auto Insurance Act or the application thereof to any person, organization or circumstance is held to be unconstitutional or otherwise invalid, the remainder of that act and the application of such provision to other persons or circumstances shall not be affected.

B. If Section 12 of the Personal Choice Auto Insurance Act is found to be unconstitutional or invalid, in whole or in part, it is to be conclusively presumed that the legislature would not have enacted the remainder of this act without those limitations and that act shall not be severable and shall be invalid.

Section 42. EFFECTIVE DATE.--The effective date of the provisions of:

A. Sections 1 through 38 of this act is July 1, 2000; and

B. Sections 39 and 40 of this act is July 1, 1999.