Stacking UM coverage — the rule TX doesn't have.

What stacking is

"Stacking" is the practice of combining multiple uninsured-motorist (UM) or underinsured-motorist (UIM) coverages into a single larger pool of available insurance.

The two main types:

• Intra-policy stacking. One policy covers multiple vehicles. You stack the UM/UIM coverage across each vehicle. Example: 3 cars on one policy, each with $30k UM, stacks to $90k.
• Inter-policy stacking. Multiple policies (typically across household members or family-owned vehicles). You stack across policies. Example: husband's policy on one car + wife's policy on another = combined UM coverage.

New Mexico generally allows both types — unless the insurance company has executed a valid written rejection of stacking.

Texas, by contrast, does not allow stacking. A Texas driver with the same setup gets only the single-vehicle limit.

The leading case: Schmick v. State Farm

The foundational NM case is Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 704 P.2d 1092 (1985).

In Schmick, the NM Supreme Court ruled that intra-policy stacking is allowed unless the insurance contract specifically and validly excludes it. The default rule is: if you paid a separate UM premium for each vehicle, you get a separate UM coverage amount for each vehicle.

The Court's reasoning was straightforward: if the insurance company charged you for coverage on each vehicle, you bought coverage on each vehicle. Treating the multiple premiums as buying a single coverage amount would be a windfall to the insurer.

Follow-on cases extended Schmick to inter-policy stacking. In Romero v. Dairyland Insurance Co., 111 N.M. 154, 803 P.2d 243 (1990), the Court held that stacking applies across separate policies as well — under the same default rule.

The written rejection requirement

Under NMSA § 66-5-301(C), an insurance company can exclude or limit stacking — but only with a valid written rejection executed by the named insured.

"Valid" means more than just a clause buried in the policy language. NM courts have required:

• An express, signed rejection of stacking by the insured (typically a separate form, not a hidden policy provision)
• The rejection must be specific — it must clearly explain what's being rejected and the consequences
• The insured must have been informed of the right to stack before the rejection was signed

If the insurance company can't produce a valid written rejection, stacking applies by default — full stop.

This matters because most insurance companies fail to clearly explain stacking at policy inception. Many drivers reject "stacking" without understanding what they're giving up. Years later, when a catastrophic injury claim hits, the rejection often turns out to be invalid.

Worked example: when stacking doubles or triples the recovery

Let's say you're hit by an uninsured driver and suffer serious injuries — $500,000 in medical bills, lost wages, and pain/suffering damages.

Your household has:

• Your car — $50k UM limit
• Your spouse's car — $50k UM limit (on the same policy)
• Your son's car (lives at home, on your policy) — $50k UM limit
• Spouse's separate policy on an inherited vehicle — $50k UM limit

Texas math: $50k recoverable (one vehicle's coverage). Case undervalued by $450k.

New Mexico math: $200k recoverable ($50k × 4 vehicles stacked). Case still undervalued, but by half as much.

This is the scenario where stacking makes the most difference: catastrophic injury cases where the at-fault driver is uninsured or underinsured. The difference between stacking and not-stacking is often hundreds of thousands of dollars.

UIM and the “underinsured” question

Underinsured motorist (UIM) coverage applies when the at-fault driver's insurance is not enough to cover your damages. UIM kicks in to make up the difference, up to the UIM limit.

In NM, UIM is generally stackable on the same terms as UM (Schmick logic applies equally). But there's one common adjuster trick: arguing that you're not "underinsured" because the at-fault driver's policy limits equal or exceed your UIM limits.

This argument has been rejected by NM courts. The "underinsured" determination is based on whether the at-fault driver's coverage is enough to compensate your damages, not whether it equals your UIM limit. If your damages are $500k and the at-fault driver has $30k, you're underinsured — even if you only carry $25k of UIM.

The “household exclusion” trap

Many NM policies contain a "household exclusion" — language that excludes UM/UIM coverage when the at-fault driver lives in the same household as the insured.

The classic example: husband negligently hits wife while driving the family car. Wife tries to claim UM benefits from her own policy or the family policy. The carrier denies, citing the household exclusion.

NM courts have generally narrowly construed these exclusions, and several decisions have struck them down as contrary to public policy. The leading principle: a UM coverage that fails to apply when the family member is the negligent driver is providing illusory coverage for which premiums were paid.

That said, household exclusions remain a live issue and the outcome depends on the specific policy language and facts. Always consult a lawyer before accepting a UM denial on household-exclusion grounds.

How to preserve stacking rights from day one

If you've been in a serious accident in NM and think UM/UIM may apply:

• Identify every policy that might cover you — your own, your spouse's, family members in the household, even a driver's relatives if facts support it
• Don't accept the first carrier's "stacking is rejected" answer without proof — make them produce the rejection form
• Don't sign a release with the at-fault driver's carrier until you've evaluated UIM availability. A release can extinguish UIM rights against your own carrier under certain policy language.
• Notice your UIM carrier of the claim and the at-fault settlement before finalizing the settlement (most policies require this)