New Mexico Uniform Civil Jury Instructions and Insurance Bad Faith
When an insurer delays, denies, or refuses to settle a claim, the governing law depends on whose claim was handled and what the insurer did. New Mexico’s civil jury instructions explain how a jury may consider different disputes, but they do not replace law or evidence. If you are researching New Mexico uniform civil jury instructions and insurance bad faith, the key point is this: jury instructions guide how jurors apply the law. They do not create a claim or prove misconduct. UJI 13-1702 addresses first-party claims. Other instructions address different claims.
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Chapter 17 covers common-law and statutory insurance bad-faith claims, while contract claims use a separate set of instructions, according to the New Mexico Supreme Court’s Chapter 17 introduction. Understanding what instructions do is the first step toward distinguishing the claim, the proof, and any remedy that may be available.
How New Mexico Uniform Civil Jury Instructions Frame Insurance Bad Faith Claims
At trial, jurors need legal rules stated in a form they can apply to the evidence. New Mexico’s Uniform Civil Jury Instructions (UJIs) provide standardized guidance for that task. Chapter 17 addresses common-law and statutory insurance bad-faith claims, including instructions and commentary concerning causation, defenses, and damages. It is a framework for presenting legal issues to a jury, not a substitute for the law governing a claim.
The distinction matters because an instruction does not create a cause of action. It also does not decide whether a party pleaded a claim adequately or prove that an insurer acted improperly. Those questions turn on the governing law and case facts. Pleadings identify the claims and defenses being litigated. Evidence supplies the facts each party asks the jury to accept. Instructions explain the legal standards for the issues submitted to jurors. The Supreme Court’s Chapter 17 introduction describes this scope. It cautions against treating the chapter as a complete list of every available claim or defense.
The trial judge shapes that guidance. The judge considers the claims, law, and evidence, then selects instructions for the issues the jury will decide. Some instructions include bracketed language or alternative theories. Those options do not apply automatically in every case. The use notes to UJI 13-1702 say optional paragraphs should reflect the plaintiff’s claims when law and evidence support them. The jury charge must be tailored, not copied wholesale from a form.
Chapter 17 also should not be confused with a separate contract claim. The chapter introduction states that breach-of-contract instructions, whether brought by an insured or insurer, are drawn from Chapter 8, Contracts and UCC Sales. A single dispute may involve both a contract theory and a bad-faith theory, but the jury needs instructions for each legal question from the appropriate source. Contract instructions address the contract claim; Chapter 17 instructions address the insurance bad-faith issues that are properly presented.
The introduction adds that the absence of a specific instruction in Chapter 17 or Chapter 8 does not, by itself, mean a claim or defense is unavailable. It means New Mexico case law has not developed enough to justify a standard instruction. For a broader overview of the underlying subject, see Fusion Legal Group’s guide to insurance bad faith in New Mexico. This article focuses more narrowly on how jury instructions guide the trial, and where their role ends.
How UJI 13-1702 Frames First-Party Claim Handling
When a policyholder asks an insurer to pay a claim under their own policy, New Mexico’s UJI 13-1702 gives the jury a framework for assessing the insurer’s conduct. It states that, under the circumstances, the insurer must act fairly, reasonably, honestly, and in good faith when deciding whether to pay. The instruction guides the jury; it does not by itself create a claim or establish that the insurer acted improperly.
The instruction identifies possible ways a first-party claim may be handled in bad faith. Depending on the claim and evidence, an insurer may fail to give the policyholder’s interests equal weight. It may also fail to investigate, evaluate, or pay promptly. Unreasonable delay in telling the policyholder whether the claim will be paid or denied is another possible theory. The instruction also addresses a refusal for frivolous or unfounded reasons that are unreasonable under the policy.
These are not automatic findings based on a delay or denial alone. The use notes direct courts to include the optional paragraphs to reflect the plaintiff’s claims when supported by law and evidence. Other grounds may be included only if warranted on that basis. The instruction also has optional language addressing bad-faith handling independent of whether the policy provides coverage, which applies only when law and evidence support that theory. Bracketed wording therefore signals choices for a case-specific instruction, not a checklist every jury receives.
The record matters. Policy terms and the insurer’s stated reason may show how a denial relates to coverage. Claim communications, dates, information requests, and investigation records may show what the insurer knew and when it acted. These materials do not prove bad faith by themselves. Their importance depends on context, including what information was available and what further inquiry was reasonable.
UJI 13-1702 also makes clear that a denial for reasons reasonable under the policy is not bad faith simply because the policyholder disputes the decision. A factfinder may need to consider both the insurer’s explanation and the evidence available during claim handling. The question is not simply whether the claim was denied or took time, but whether the insurer’s conduct met the governing standard under the circumstances.
For the official text and use notes, see New Mexico UJI 13-1702. The instruction was amended effective for cases pending or filed on or after December 31, 2023, so the applicable version and legal issues should be assessed in context.
When UJI 13-1704 Applies to a Failure-to-Settle Dispute
UJI 13-1704 addresses a different problem from an insurer’s decision on its policyholder’s own claim. It applies when an insurer decides whether to investigate, negotiate, or settle a liability claim brought against its insured. That distinction matters: the instruction is not a general test for every disputed or denied insurance claim.
For a first-party claim, UJI 13-1702 addresses the insurer’s decision to pay the policyholder. UJI 13-1704 concerns settlement decisions on a claim against the insured, typically one that could expose the insured to liability. The instructions address different conduct, though both involve good faith. Read the official text of UJI 13-1704.
UJI 13-1704 requires good faith when deciding whether to settle a claim against the insured. It also states the insurer must settle when practicable. The insurer must use honest, informed judgment. It must fairly balance its interests with the insured’s. Rejecting an offer does not automatically establish bad faith. The instruction says an insurer is not liable when it acts honestly and fairly after a diligent, competent, and reasonable investigation.
The question is not simply whether the insurer could have settled. Assess the decision against information available at the time. Investigation and settlement records may show what the insurer gathered and how it evaluated the claim. They may show whether it considered the insured’s interests and responded to a settlement opportunity. These are lines of inquiry, not a checklist that proves liability.
UJI 13-1704 includes bracketed language for particular situations. One option concerns a substantial likelihood of recovery above policy limits. Another addresses an offer to settle within those limits. The use notes limit those provisions to cases that fit the stated circumstances. A trial court selects instructions supported by law and evidence. Not every bracketed provision governs every failure-to-settle dispute. The instruction also does not resolve disputed facts or establish that a particular settlement was practicable.
This instruction focuses on the insurer’s good-faith duties in handling a liability claim against its insured. An injured claimant does not automatically gain a direct claim against the insurer simply because UJI 13-1704 describes those duties. Whether a claimant may assert a particular claim depends on applicable New Mexico law and the facts, and requires case-specific legal analysis. The instruction itself should not be treated as creating a cause of action.
For context on other types of insurer conduct, see the firm’s broader guide to insurance bad faith in New Mexico. The distinction between first-party claim handling and liability-claim settlement remains essential: the evidence and legal basis must match the conduct at issue.
What Evidence Helps Connect the Instruction to the Record?
A jury instruction supplies a legal framework; the evidence supplies the account of what happened in a particular claim. The useful question is not simply whether a file contains a delay, denial, or disputed valuation. It is whether admissible evidence, considered with the governing law, supports the specific theory that may be submitted to the jury. The New Mexico Supreme Court’s instructions make this connection explicit: optional language in UJI 13-1702 is used when supported by the claim, law, and evidence, rather than inserted automatically.
Depending on the dispute, a lawyer may review materials such as:
- The policy and claim file: the policy language, notices, submitted proof, adjuster notes, investigation records, and recorded reasons for a coverage or payment decision.
- Communications and timing: letters, emails, call records, requests for information, responses, and dates that help establish what each side knew and when. A concise chronology can make gaps or changing explanations easier to evaluate.
- Investigation materials: inspection records, photographs, statements, medical or repair records, and expert reports, if any. These may help show what information was available, what was requested or considered, and whether a further inquiry was relevant.
- Valuation and payment records: estimates, evaluations, payment calculations, explanations for reductions, and records of any payment or denial. The evidence may help explain how a decision was reached, but disagreement over value alone does not establish improper handling.
- Settlement records in a third-party dispute: demands, offers, counteroffers, available liability information, and communications about settlement. These materials may bear on the insurer’s decision-making for a claim against its insured.
These are possible evidence categories, not a mandatory checklist. UJI 13-1702 addresses an insured’s own claim, including prompt evaluation or investigation. UJI 13-1704 concerns settling a claim against the insured. Documents relevant to one theory may not answer questions raised by another. The court tailors instruction language to the legal theory and record.
Keep the legal elements separate from the documents. A policy, timeline, or adjuster note is not itself an element of bad faith, and no single item automatically proves it. Evidence must be assessed together, in context, and under the applicable legal standard. For claimants organizing their communications, this guide to dealing with insurance adjusters may offer practical background; it does not determine whether a legal claim exists.
For prompt claim handling, see the official New Mexico UJI 13-1702. For settlement disputes, consult UJI 13-1704. The facts and legal claims determine which instruction applies.
New Mexico Uniform Civil Jury Instructions and Insurance Bad Faith: Statutory Claims
A claim under the New Mexico Insurance Code follows a separate statutory route from common-law bad faith. UJI 13-1702 focuses on whether an insurer handled a first-party claim fairly, reasonably, honestly, and in good faith under the circumstances. By contrast, UJI 13-1706 addresses specified unfair practices under Article 16 of the Insurance Code. The New Mexico Supreme Court’s official UJI 13-1706 frames the statutory question around a practice prohibited by law, the required knowledge or frequency, and damages caused by the conduct.
The statute, NMSA 1978, Section 59A-16-20, lists categories of unfair claims practices. These include misrepresenting relevant policy terms. They also include failing to respond reasonably promptly to claim communications. Other examples are failing to use reasonable investigation standards or failing to attempt fair settlement when liability is reasonably clear. The precise statutory language matters. A disputed decision or delay does not automatically fit a listed category.
UJI 13-1706 directs that applicable practices be stated using the Insurance Code’s language. They must be supported by substantial evidence. The instruction adds another condition. The practice must be committed knowingly, or occur often enough to indicate a general business practice. These are alternatives, not cumulative requirements. Evidence about a claim may bear on knowledge. Other claim records or company procedures may bear on frequency. The court decides what evidence is admissible and sufficient in context.
This distinction prevents treating a checklist of prohibited practices as an automatic path to liability. The jury would need to decide whether the conduct proved matches the statutory practice submitted in the instructions and whether the required knowledge or general-business-practice condition is met. Even then, the instruction ties recovery to damages caused by the conduct. A loss that occurred for an unrelated reason, or damages not connected to the statutory practice, would not satisfy that causation requirement merely because the claim handling was disputed.
The statutory claim may overlap with a common-law claim, but they are not the same. UJI 13-1702 concerns common-law claim handling. Section 59A-16-20 lists prohibited practices and a separate statutory condition. A case may involve one theory or both, depending on the facts and legal basis.
| Issue | Common-law claim | Statutory claim |
|---|---|---|
| Source | Common law. See UJI 13-1702. | Insurance Code Article 16. See UJI 13-1706. |
| Focus | Good-faith claim handling. | Listed practice plus knowledge or frequency. |
| Evidence | Theory and related harm. | Practice and resulting damages. |
The court selects the appropriate practices and instructions. Jurors evaluate evidence under the instructions they receive. The statute’s list and UJI 13-1706 do not decide a claim without case-specific analysis.
How New Mexico Jury Instructions Explain Insurance Bad Faith Remedies
A bad-faith claim does not make every loss recoverable. A finding of insurer misconduct does not automatically support every remedy. The jury evaluates the claim and evidence under the legal standards the court provides. For punitive damages, UJI 13-1718 requires a compensatory-damages finding for bad-faith actions before a separate inquiry into the insurer’s conduct.
Compensatory damages address harm legally attributable to the bad-faith conduct. UJI 13-1718 does not authorize punitive damages simply because a plaintiff proves compensable injury. Nor does common-law bad faith alone establish punitive entitlement. The instruction requires a specified form of culpable conduct. Examples include reckless disregard for the plaintiff’s interests, dishonest judgment, or malicious, willful, or wanton conduct. The court selects language that fits the case. Bracketed options do not automatically apply in every dispute.
Under UJI 13-1718, punitive damages are discretionary. If the required findings are made, the jury may award them. The instruction identifies punishment and deterrence as their limited purposes. Jurors assess any award in light of the circumstances, including the nature of the wrong and aggravating or mitigating evidence. Any award must bear a reasonable relationship to the injury and compensation. It must not be disproportionate to the circumstances. The instruction does not set a fixed amount.
Sloan v. State Farm explains how the culpable-conduct requirement applies in common-law insurance bad-faith cases. For failure-to-pay, evidence must support a finding that the refusal was frivolous or unfounded. For failure-to-settle, evidence must support a finding that the insurer’s decision rested on dishonest or unfair balancing of interests. A compensatory-damages finding alone does not satisfy this separate punitive inquiry.
Whether the jury receives a punitive-damages instruction depends on the claim, governing law, and evidence. UJI 13-1718’s use notes address when the instruction ordinarily applies. They allow omission where the plaintiff has not made a prima facie showing of culpable mental state. The trial judge determines the applicable charge and which alternatives fit the case. Discussing a remedy does not require the jury to decide it. The legal basis and supporting evidence must warrant the instruction.
These distinctions matter when assessing what a verdict establishes. Compensation is not itself a punitive award. Punitive damages are never automatic. Instructions guide the jury, but do not replace proof of the required conduct, connection to harm, and legal prerequisites.
Discuss your New Mexico insurance dispute with Fusion Legal Group.
Questions about how an insurance claim was investigated, evaluated, or settled can leave you unsure which details matter. A conversation can help put the dispute in context and identify whether the available facts warrant legal review. Contact Fusion Legal Group to request a free consultation about your New Mexico insurance dispute, or call (505) 317-4162 to discuss a suitable next step.
Frequently Asked Questions
What do New Mexico’s uniform civil jury instructions do in an insurance bad-faith case?
They give the jury legal standards the judge finds applicable to the claims and evidence. They do not create a claim or prove that an insurer acted improperly; the court selects and tailors instructions for the case. See the New Mexico Supreme Court’s Chapter 17 introduction.
When does UJI 13-1702 apply instead of UJI 13-1704?
UJI 13-1702 addresses an insurer’s handling of its policyholder’s own claim, such as evaluating, investigating, or deciding whether to pay it. UJI 13-1704 concerns negotiating or settling a liability claim brought against the insured. The distinction turns on the type of insurance conduct at issue, not simply who filed a lawsuit.
Does an insurance claim denial by itself establish bad faith?
No. UJI 13-1702 states that a denial for reasons reasonable under the policy is not bad faith; the jury would need to consider the applicable legal standard and evidence about the insurer’s conduct. A disputed coverage decision alone does not answer whether claim handling was in bad faith. See UJI 13-1702.
Can punitive damages be awarded whenever a jury finds insurance bad faith?
No. Punitive damages are not automatic; they require a separate legal basis and evidence supporting the applicable standard. In Sloan v. State Farm, the New Mexico Supreme Court explained that a compensatory-damages finding alone does not establish entitlement to a punitive-damages instruction.
Where can I check the current New Mexico uniform civil jury instructions?
Start with the New Mexico Supreme Court’s official website and its Uniform Jury Instructions materials. Review the instruction’s accompanying use notes and the applicable rule, because optional language is not automatically included in every case. A judge determines which instructions fit the claims, governing law, and trial evidence.
Contact us about a New Mexico insurance dispute
Questions about how an insurance claim was investigated, evaluated, or settled can leave you unsure which details matter. A conversation can help put the dispute in context and identify whether the available facts warrant legal review. Contact Fusion Legal Group to request a free consultation about your New Mexico insurance dispute, or call (505) 317-4162 to discuss a suitable next step.
Anthony Spratley is the founder and managing attorney of Fusion Legal Group, a veteran-owned personal injury law firm serving clients throughout New Mexico. A retired U.S. Air Force Judge Advocate General (JAG) officer with 24 years of military service, Anthony has been licensed to practice law in New Mexico since 2003 and is admitted to the U.S. District Court, District of New Mexico. He has handled 350+ cases across personal injury, criminal defense, and family law—bringing battle-tested discipline to every client’s case. Anthony is a first-generation college graduate, a father of five, and a youth sports coach in Albuquerque.