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UIM limits challenged

UIM limits challenged

UIM limits challenged
December 01
15:04 2021


Digested from case reports published online



UIM limits challenged

Kenneth Bogue was driving on a county road in Decatur, Indiana, followed by Terry Robinson and his passenger, Shelina Glover. Matthew Hahn was approaching these drivers on the same road from the opposite direction.

As Bogue and Hahn were passing each other, Hahn clipped the trailer that Bogue was pulling. The impact forced Hahn into Robinson’s path, causing a head-on collision in which Shelina died. Four insurance carriers were involved:

Omni Insurance, which insured Bogue

Allstate Property & Casualty Insurance Company, which insured Hahn

American Family Insurance Company, which insured Robinson

GEICO, which insured Shelina

Omni and Allstate divided responsibility for the accident, assigning 52% of liability to Bogue and 48% to Hahn. Omni then offered its policy limits because others also sustained injuries in the accident.

As Omni’s suit was proceeding, Steven Glover, as personal representative of Shelina’s estate, sued Allstate, alleging it had issued a policy to Shelina’s parents, Wayne and Dovie Glover, and owed excess underinsured motorist (UIM) coverage to Shelina. According to the suit, Shelina was a “resident relative” under her parents’ policy because she had moved in with them six weeks before the accident and intended to live there for the foreseeable future. Thus, the suit alleged Shelina was an “insured person” under her parents’ policy.

After the estate sued, Omni’s action went to mediation, during which time Omni (for Bogue) and Allstate (for Hahn) agreed to pay the estate their respective per-person liability limits totaling $75,000. Later, the estate received two separate $25,000 UIM payments—one each from American Family (for Robinson) and GEICO (for Shelina). These payments brought the estate’s total recovery to $125,000—consisting of $75,000 in liability settlements and $50,000 in UIM settlements.

Allstate, as insurer for Shelina’s parents, then sought summary judgment against the estate, arguing two issues. First, the policy required the parents to notify Allstate when an operator became a “resident relative,” and the parents never told Allstate that Shelina had moved in with them. Second, Allstate owed nothing to the estate under the anti-stacking and offset provisions of her parents’ policy because the estate had received settlements from other insurers in amounts that exceeded the parents’ UIM limit.

The estate cross-moved for summary judgment, arguing that the notification requirement did not apply, that Allstate’s policy allowed for offsets only of liability settlements, and that the anti-stacking provision barred aggregating UIM limits but not UIM recoveries. The gist of the estate’s argument was that it was entitled to $25,000 in UIM coverage under the parents’ policy. The trial court granted summary judgment for Allstate based on the offset provision but denied the insurer’s motion on the issue of notification. The estate appealed.

The court of appeals affirmed the lower court’s decision, concluding that the parents’ Allstate policy mandated that UIM limits “shall be reduced by all amounts paid to the estate.” Because the estate had already recovered funds from other insurers, the court held that “the policy’s UIM limit was reduced to zero.”

The court did not reach the issue of Shelina’s status as a “resident relative.” The court granted the estate’s petition to transfer the case to the state supreme court, thus vacating the court of appeals’ opinion.

When Shelina moved in with her parents, she packed up everything she and her children owned; she changed her address with the United States Postal Service to that of her parents’ home, and her parents described their home as “Shelina’s new home.” These facts showed that Shelina intended to remain at her parents’ home and thus was a “resident” under their policy.

Allstate nevertheless argued that Shelina was not an “insured person” because of its lack of notice. The estate countered that the policy’s plain language said the notice requirement applied “whenever an operator becomes a resident of your household.”

Allstate’s policy did not define “operator,” nor did it propose a definition. Given the policy’s silence and the term’s plain meaning, the supreme court interpreted “operator” to mean a person who is or will be operating one of the vehicles covered under the policy.

When Shelina moved into her parents’ home, she had her own car, and her parents did not anticipate that she would operate either of the vehicles listed on their policy.

Because Shelina was not an “operator,” the Glovers did not have to notify Allstate that she had moved in with them. Thus Shelina was a “resident relative” to whom the notice requirement did not apply, making her an “insured person” under the Glovers’ Allstate policy.

With respect to the policy’s anti-stacking clause, the court held that it prevented only the aggregation of UIM policy limits; it did not bar aggregating more than one UIM recovery. Then the court held that Allstate’s $100,000 per-person UIM limits were offset by the $75,000 the estate received from Hahn’s and Bogue’s insurers. These payments were made on behalf of the two drivers who were “legally responsible” for Shelina’s death. But Allstate’s UIM limits were not offset by the UIM payments the estate received from Robinson’s and Shelina’s own policies. Thus the estate could recover $25,000 in excess UIM benefits under the Allstate policy as its total recovery would still be less than the policy’s $100,000 UIM limits.

The supreme court vacated the trial court’s judgment and remanded the case with instructions to grant the estate’s cross-motion for summary judgment.

Glover v. Allstate Property & Casualty Insurance Company—Indiana Supreme Court—October 8, 2020—No. 19A-CT-403.




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