Drunk Drivers, Punitive Damages and Insurance Company Exclusions

Nobody expects to be involved in a car crash with a drunk driver.  Even if you drive defensively and make good decisions, it is impossible to account for a drunk driver who will ignore stop signs, drive right through a red light or just not brake as you sit waiting for your light to change.  But drunk driving accidents are not like other car accidents.  They include a claim for punitive damages.  Punitive damages are awarded to a victim of a drunk driver for two reasons.  To punish the driver for his reckless conduct and to deter others from similar conduct.

Drunk driver accidents are not like other accidents for another reason.  Besides the obvious facts that they are reckless conduct and more than just negligent, the drunk driver’s insurance company doesn’t have to pay for all of your damages like an accident with a normally negligent driver.


It may seem hard to believe but that last paragraph was correct.  A drunk driver’s insurance does not cover all of the damages and is allowed to exclude an entire class of damages: Punitive Damages.   The policy will have something like the following exclusion of punitive and exemplary damages:

Punitive Damages Exclusion:

 We do not provide coverage for:

  1. Punitive or exemplary damages;
  2. Fines;
  3. Penalties;
  4. Treble damages; or
  5. Multiplied or multiple damages imposed upon any “insured”.

This includes any defense or legal expenses incurred as a result of items 1., 2., 3., 4. or 5, above.

 This issue was first addressed by New Mexico Courts back in 2001 in State Farm Insurance v. Johnson.  In Johnson, the question was asked whether New Mexico’s mandatory liability insurance law requires coverage of punitive damages by a liability carrier.  The court held that “New Mexico law does not require such coverage and that an insurer may contractually exclude punitive damages from its liability policy.”


The short answer to this question is probably “yes.”  It depends on whether you have uninsured motorist coverage.  Your uninsured motorist policy probably has the same exclusion that says your insurance carrier will not pay punitive damages at all.  However, this provision is a violation of New Mexico public policy and law.

New Mexico courts have addressed the question in Stinbrink v. Farmers Insurance Company of America. Even though the court recognized that the insurance policy was a contract and that there is a general freedom to contract, the terms of the contract will not be enforced “unless they clearly contravene some positive law or rule of public morals.”

Pursuant to New Mexico Statute, Section 66-5-301(A) an insurance company must offer insurance coverage for uninsured motorist coverage “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 … death … or destruction of property.” The court read the section stating that coverage for damages that a victim is legally entitled to recover for include punitive damages.

This holding was based, in large part, on the court’s prior holding Stewart v. State Farm Mutual Automobile Insurance Co.  In Stewart the court held that the legislative purpose of compulsory uninsured motorist coverage is “to protect the insured against the financially [sic] unresponsible motorist, not to protect the insurance company.”  The court emphasized that the only requirement was that the injured person must be legally entitled to recover damages from the uninsured motorist.

The court in Stewart then held that punitive damages were included in the reading of the uninsured motorist statute as damages for bodily injury.  However, in Stewart, the court included a statement (dicta) that punitive damages could be excluded by “an express exclusion” in the policy.

Nevertheless, Stinbrink overruled this portion of Stewart and made clear that punitive damages could not be excluded, as a matter of New Mexico law, from an uninsured motorist policy.

If you  were involved in a crash with a drunk driver, contact Whitener Law Firm ONLINE or at (505) 883-RUSS for a FREE CONSULTATION.  Remember there is NO ATTORNEY FEE unless you settle or win your case. 

After a Crash, Don’t Accept Quick Cash… call Whitener Law Firm, P.A.