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Insurer denies UIM benefits

Insurer denies UIM benefits

Insurer denies UIM benefits
March 30
08:35 2022

INSURANCE-RELATEDCOURTCASES

Digested from case reports published online

COURT DECISIONS

Insurer denies UIM benefits

On May 7, 2016, Mark Harrington ran a stop sign and collided with Antony Bergantino’s vehicle. Bergantino and Diane Bergantino, who was a passenger in the vehicle, were injured. Harrington had liability coverage through USAA Insurance Company with limits of $100,000 per person. Bergantino’s vehicle was insured by State Farm, including $100,000 per person coverage for medical expenses and $100,000 per person coverage for underinsured motorists (UIM).

With State Farm’s consent, USAA and Bergantino agreed to settle his claim against Harrington for policy limits, and USAA and Diane Bergantino agreed to settle her claim for $99,000. State Farm paid the Bergantinos’ medical bills and agreed to waive its rights to subrogation or reimbursement of the medical payments from the proceeds of their settlements with USAA.

In the meantime, the Bergantinos filed claims with State Farm for UIM benefits, asserting that the USAA settlement amounts were insufficient to compensate them for their damages. State Farm offered Bergantino $13,370 in UIM benefits but determined that Diane Bergantino “was fairly compensated within the policy limits of the at-fault party,” so it did not offer her any UIM benefits. The Bergantinos demanded that State Farm pay each of them full UIM benefits of $100,000. After receiving no satisfactory response from State Farm, they filed suit.

In their complaint, the Bergantinos asserted that State Farm breached the insurance contract by not paying UIM benefits, acted in bad faith by delaying and denying payment of the benefits, and breached the implied covenant of good faith and fair dealing. State Farm moved for summary judgment, generally arguing that the Bergantinos were not entitled to UIM benefits because Harrington’s vehicle was not “underinsured” as the term was defined in the policy, there were no disputed issues of material fact on their bad faith claims, and State Farm was entitled to judgment as a matter of law. The Bergantinos contested State Farm’s summary judgment motion. The district court granted summary judgment to State Farm. The Bergantinos appealed.

On appeal, the court stated that the UIM language of the policy was clear and unambiguous. An insured is qualified for UIM benefits only when he is entitled to recover compensatory damages for bodily injury from the owner or driver of an underinsured vehicle. An at fault driver’s vehicle is underinsured when its liability limits are less than the limits of the underinsured provision of the State Farm policy. Here, the two amounts are the same—Harrington’s USAA policy had a liability limit of $100,000 per person and Bergantino’s UIM coverage had limits of $100,000 per person. Because Harrington’s vehicle did not meet the definition of an underinsured vehicle, benefits were not available to the Bergantinos under the UIM provision of the State Farm policy.

Although the Bergantinos argued to the district court that they were entitled to UIM benefits in addition to the benefits available under Harrington’s USAA policy, they did not continue that position on appeal. Indeed, several provisions of the policy, including the “limits” and “nonduplication” sections, clearly demonstrate the parties’ intent to preclude such “stacked” coverage.

The Bergantinos were not entitled to UIM benefits under the policy, and their bad faith claims were based on State Farm’s denial or delay in paying such benefits. Under these circumstances, the district court properly granted summary judgment to State Farm on the Bergantinos’ bad faith claims.

The judgment of the district court was affirmed.

Bergantino v. State Farm Mutual Automobile Insurance Company—Supreme Court of Wyoming—December 14, 2021—No. S-21-0107.

 

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Jim Brooks

Jim Brooks

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