Settlements Against Uninsured New Mexico Rail Service Reach Nearly $8M

New Mexico’s commuter rail service has received a free ride while taxpayers have shelled out nearly $8 million to settle damage claims against the Rail Runner Express, according to state records.

The Rail Runner, until July, didn’t pay premiums for the state’s self-insurance program that provides liability coverage for settlements of lawsuits against government agencies. The insurance arrangement represented a little-known subsidy for the state-owned passenger train.

The taxpayer-financed liability fund has covered about $7.7 million in settlements involving the Rail Runner, including $4.2 million for wrongful death claims for car-train accidents in Valencia County that killed three people in 2007, according to General Services Department records.

Gov. Susana Martinez’s administration started assessing an annual insurance premium on the Rail Runner in the budget year that began last month.

The Rail Runner will pay $2 million to cover liability claims up to $3 million. The Rail Runner buys insurance in the private market for claims over that amount.

State agencies typically pay for coverage based on their history of liability losses. But that didn’t happen for Rail Runner when it started in 2006 during former Gov. Bill Richardson’s administration.

Because the Rail Runner paid nothing into the insurance fund, the rates for other state agencies ended up being higher, according to Risk Management Director A.J. Forte.

He estimates there were uncollected Rail Runner premiums of about $5 million during the past three years.

Rail Runner won’t be required to retroactively pay any premiums, but will be charged going forward starting with this budget year.

The insurance is for claims such as when the train hits livestock, if a rider is injured and for fatalities.

Topics Claims Mexico New Mexico