Uninsured/Underinsured Motorist Coverage: The Good, the Bad, and the Ugly

Etherton v. Owners Insurance Company:


On December 19, 2007, Donald Etherton was rear-ended. Mr. Etherton’s back was injured in the collision and he had to endure three back surgeries to repair the damaged disc in his spine. The other driver’s insurance settled with Mr. Etherton for $250,000, the policy limits. Because that amount did not cover all of his expenses from the accident, Mr. Etherton filed a claim with his uninsured/underinsured motorist coverage for $750,000, the remainder of his $1,000,000 policy limits.


For six months, Mr. Etherton and Owners Insurance Company (“Owners”) communicated frequently; with Owners repeatedly stating that it needed additional information to assess Mr. Etherton’s claim. On December 30, 2009, Owners offered to settle for $150,000. Owner’s noted in their explanation for such a low offer that there were serious questions of causation. Despite continued attempts to come to an agreeable settlement for both, Mr. Etherton and Owners failed to resolve the matter and Mr. Etherton initiated his suit in Colorado state court in March of 2010 for breach of contract and unreasonable delay or denial of a claim.


Under Colorado law, “a person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.” Colo. Rev. Stat. §10-3-1115(1)(a). Furthermore the statute states that a first-party claimant whose claim has been unreasonably delayed or denied may bring a claim to recover attorney fees, court costs, and two times the covered benefits. Colo. Rev. Stat. §10-3-1115(1). The jury found that Owners had breached its contract with Mr. Etherton and caused an unreasonable delay or denial his claim for benefits. The jury awarded him $375,000 for noneconomic losses, $857,000 for economic losses, $150,000 for physical impairment and disfigurement. The Court then concluded that Mr. Etherton was entitled to $750,000 for breach of contract damages and an additional $750,000 for the unreasonable delay or denial claim.


On July 19, 2016, the United States Court of Appeals for the Tenth Circuit issued its decision in Etherton v. Owners Insurance Company, affirming the district court’s finding of breach of contract and unreasonable delay or denial of a claim for benefits. Etherton was awarded a total of $2,250,000 in damages.


For You, the Florida Resident:


Uninsured/Underinsured motorist insurance (“UM”) is important optional coverage that you can add to our auto insurance policy. UM covers you in the event that another driver causes an auto accident AND the driver has no bodily injury coverage or has less coverage then the value of your claim. Many people think that they have UM coverage because they are told they have “Full Coverage;” however “Full Coverage” does not include UM as it is not required in the State of Florida.


UM coverage falls under contract law in the State of Florida, making the statute of limitations five years. If a claim requires litigation, a suit is filed usually against both the at fault driver and the UM carrier. If the claim is settled against the at fault driver, as it was in Etherton v. Owners Insurance Company, but not the UM carrier, permission must be obtained from the UM carrier prior to accepting the settlement from the at fault driver. Essentially, the UM carrier must waive its right to subrogation. If the UM carrier refuses to waive its right to subrogation, the UM carrier must pay the claimant the amount of the settlement that was offered by the at fault. This gives the claimant some relief and allows the UM carrier to pursue a claim/suit against the at fault driver.


Unfortunately, as in the case of Mr. Etherton, UM carriers do not always follow through with its end of the bargain. In those cases, you may be forced to file a complaint against your UM carrier. While this sounds counter-intuitive, remember the reason you purchased this coverage was to protect you in precisely these situations. If your UM carrier does not respond properly or appropriately, it is your right to pursue the claim in court. Florida, like Colorado, has a law that specifically addresses these “bad faith” situations where a carrier improperly denies the claim of an insured.


Under Florida Statute, before bringing a claim against your UM carrier, the carrier must be given sixty (60) days prior written notice of the violation. You must also allege in the notice the following: the facts and circumstances giving rise to the violation; the name of any individual involved in the violation; reference to specific policy language that is relevant to the violation, if any; and a statement that notice is given in order to perfect the right to pursue a civil remedy. There is a statute of limitation for this action, which is tolled for a period of sixty (60) days by the mailing of the notice requirement. If the jury or judge finds against the UM carrier, then it shall be held liable for damages, together with court costs and reasonable attorney’s fees incurred by you, the plaintiff. Fla. Stat.§624.515(3)(a)(1)-(5).


Here at the Dean Law Firm, we are experienced in fighting for you against the insurance companies. If you’ve been in an accident, please contact us so that we can put our experience to work for you. Call us at 352-387-8700 or visit our website at www.deanfirm.com.

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