Indiana: Tortfeasor Not Underinsured in Multiple Injury Case

In an opinion handed down on July 17, the Indiana Court of Appeals ruled in favor of an uninsured/underinsured motorist coverage insurer in a case involving multiple plaintiffs. The case, Auto-Owners Insurance Company v. David Eakle, et al., No. 49A04-0606-CV-345, arose from an automobile accident in which David Eakle and his parents, Helen and Leon, were seriously injured through the fault of Lavern Weddel. Weddel died from injuries sustained in the accident. Each of the Eakles incurred medical expenses and each filed a claim with Weddel’s insurer, Indiana Insurance Company. David Eakle's wife, Melissa, also submitted a claim for loss of consortium.

Weddel’s insurer offered to pay the four claimants its policy limits of $500,000, allocated as follows: $245,000 to Helen, $160,000 to Leon, $90,000 to David, and $5,000 to Melissa. The Eakles notified their insurer of the offer and thereafter accepted the offer with their own insurer’s approval, thereby agreeing to release Weddel’s estate from further liability.

At the time of the accident, the Eakles’ vehicle was insured under an Auto-Owners policy issued to Midwest Wholesale Tires; David and Melissa Eakle were additional insureds under the policy. The policy provided UM/UIM coverage of $500,000 per person and $500,000 per accident. The Eakles filed a claim with Auto-Owners for payment under the UM/UIM coverage of their policy. Auto-Owners denied the claim, contending that the Weddel vehicle was not underinsured. The Eakles brought suit against their insurer for breach of contract and also sought a declaratory judgment that they were entitled to compensation for their UM/UIM claim. Auto-Owners filed a motion for judgment on the pleadings, and the Eakles filed a motion for summary judgment in response. The trial court expressly found that the Eakles' vehicle was an underinsured vehicle at the time of the accident and that, subject to sustaining the burden of proof, they were entitled to part or all of their UM/UIM coverage. Auto-Owners brought an interlocutory appeal.

On appeal, Auto-Owners argued that because Weddel’s insurer had paid the Eakles a total of $500,000, a sum equal to the per accident limit of the Eakles’ policy, the Weddel vehicle was not underinsured. The plaintiffs countered that because their individual payouts from Weddel’s insurance were less than $500,000 each, they were eligible for additional UIM coverage up to the policy limits of $500,000.

The Court of Appeals reviewed the statute and case law and, in so doing, noted that the UM/UIM coverage law does not require full indemnification; instead, the law’s focus is on placing the insured in the position he would have occupied had the tortfeasor’s liability coverage been equal to the insured’s UM/UIM limits.

The court concluded that where, as in this case, multiple injured claimants seek to recover under a single UIM policy, the court must compare the per-accident limit of the tortfeasor’s policy to the per-accident limit of the injured claimants’ policy. That comparison in the instant case resulted in a finding that the Weddel vehicle was not underinsured. The $500,000 paid to the four claimants by Indiana Insurance Company was not less than, but equivalent to, the UIM limits available to the Eakles for a multiple person accident.

Direct questions to NAMIC's Regulatory Affairs Counsel Marsha Harrison.

Posted: Tuesday, July 31, 2007 12:00:00 AM. Modified: Tuesday, July 31, 2007 1:52:04 PM.

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