stating that a UIM claimant may either pursue a tort claim to conclusion in district court, and then, if the judgment exceeds the liability limits of the tortfeasor’s policy, pursue UIM benefits; or settle the tort action for “the best settlement,” give notice to the underinsurer, and then maintain a claim for UIM benefits
How later courts described this case
- stating that a UIM claimant may either pursue a tort claim to conclusion in district court, and then, if the judgment exceeds the liability limits of the tortfeasor’s policy, pursue UIM benefits; or settle the tort action for “the best settlement,” give notice to the underinsurer, and then maintain a claim for UIM benefits
- explaining that UIM insurance exists for situations when the limits of the tortfeasor’s liability insurance is inadequate and not for situations when “damages are uncompensated because the insured has chosen to settle with the tortfeasor for less than the liability limits”
- concluding that "[t]he insured has the right to accept what he or she considers the best settlement available and to proceed to arbitrate the underinsurance claim for a determination of whether the damages do indeed exceed the tort-feasor’s liability limits”
- setting out a procedure by which a UIM claimant may settle an action against a tortfeasor, without forfeiting UIM benefits, by giving notice of the settlement to the UIM insurer, which may substitute its check for that of the tortfeasor’s insurer to protect its subrogation claim against the tort-feasor
Written by the judges who cited it.
Later courts went against this
Superseded by statute, as recognized in Onasch v. Auto-Owners Insurance Co.
Co., 224 Mich.App. 494, 569 N.W.2d 648 (1997); Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983), superseded by statute as stated in Onasch v. Auto-Owners Ins. Co., 444 N.W.2d 587 (Minn.Ct. App.1989); Augustine v. Simonson, 283 Mont. 259, 940 P.2d 116 (1997); Barrett v. New Jersey Mfrs.
The opinion
TODD, Justice
(concurring and dissenting).
I concur in the majority opinion except that portion which requires the injured party to obtain less than full compensation in order to expedite the total claim. That portion of the opinion is inconsistent with the rest of the opinion. The so-called “gap” arises when the liability carrier tenders less than the full amount of its coverage. The majority concludes that the injured party would have no incentive to seek maximum recovery if the underinsured carrier is responsible for all amounts due over and above the proposed settlement amount. This approach ignores the solution provided in the opinion itself and .has a very bad practical effect. If allowed to stand the injured party will not be able to negotiate any reasonable settlement with the liability carrier unless willing to bear a financial loss. This is not necessary. The majority opinion provides the solution. The injured party should negotiate the best possible settlement. The offer is communicated to the underinsured carrier. If it is not satisfied, the offer should be rejected, the underin-sured carrier should immediately pay the amount of the offer to the injured party, and they should immediately proceed to arbitration. This method places in the under-insured carrier the ability to manage its role in the pending claim to its best advantage without imposing any financial burden on the injured party.