From the Desk of Kyle Riley: This case focuses on which policies are deemed “applicable” under RCW 48.22.030 as related to an injured party’s UIM (“underinsured motorist”) claim.
Claims Pointer: Underinsured motorist (or “UIM”) coverage provides a second layer of coverage for insureds that “floats” on top of liability coverage. Thus, an insured injured in a motor vehicle accident can recover under their policy’s UIM coverage if all “applicable” policies covering the at-fault driver fail to fully compensate their damages. RCW 48.22.030 of the UIM statute determines which policies covering the at-fault driver’s vehicle are “applicable” to a UIM claimant. Once one or more policies have been deemed applicable, the UIM claimant’s damages have to exceed the policies’ combined liability limits to have a valid UIM claim, notwithstanding any prior settlements paid from the applicable policies.
Ochoa v. Progressive, in the Court of Appeals of the State of Washington, Division I, No. 67693-8-I, — P3d —-, (December 10, 2012) (unpublished).
On June 24, 1999, Janette Ochoa was struck and injured by a car operated by Dawnell Smith, a pizza delivery driver for Domino’s Pizza, when Ms. Smith went through a stop sign. At the time of this collision, Ms. Smith was driving her own car and carried State Farm Mutual Automobile Insurance. Ms. Smith’s employer also carried a policy from Evanston Insurance Company, with limits of $1,500,000, covering liability related to any non-owned vehicle being driven by an employee. However, Ms. Smith was not a named insured on the Evanston policy. Ms. Ochoa had an insurance policy from Progressive Classic Insurance Company which included Underinsured Motorist (“UIM”) coverage in the amount of $50,000. Ms. Ochoa eventually settled with Ms. Smith’s auto insurer for $50,000 as well as Ms. Smith’s employer for $25,000 (paid by the employer’s insurer, Evanston). Ms. Ochoa thereafter claimed that these settlement amounts did not fully cover her damages from the collision and made a UIM claim to Progressive. Progressive denied her UIM claim, taking the position that to have a UIM claim, Ms. Ochoa’s damages had to exceed the combined liability limit amounts of both Ms. Smith’s personal State Farm policy and her employer’s Evanston policy—$1,550,000.
Ms. Ochoa filed suit against Progressive for wrongful denial of her UIM claim arguing that only the State Farm policy limits applied as a setoff. The parties stipulated to the pertinent facts and submitted the issue to the court. The trial court agreed with Progressive, finding that the Evanston policy liability limit as well as the State Farm liability limit served as setoffs for the threshold for Ms. Ochoa’s UIM claim regarding Ms. Smith’s liability. Ms. Ochoa appealed.
In determining whether the Evanston policy was an “applicable” policy related to a UIM claim under RCW 48.22.030, the court of appeals agreed with the trial court. The court looked to prior cases in which it had determined that the liability policies applicable to UIM claimants were those from liability insurers that could be legally required to pay for claimant’s injuries if the claimant diligently pursued claims to final adjudication. Ms. Ochoa and Progressive had previously stipulated that Ms. Smith’s employer’s Evanston policy was applicable because the collision included Ms. Smith’s personal vehicle and occurred while Ms. Smith was acting within the course and scope of her employment. Thus, because the Evanston policy was applicable to the collision, it served as a setoff related to Ms. Ochoa’s UIM claim despite the fact that Ms. Smith was not a named insured by the Evanston policy. Further, the court found that once the Evanston policy was deemed applicable to Ms. Ochoa’s claim, it was applicable to the extent of its limits and not merely to the extent of the $25,000 settlement amount Evanston had previously negotiated with Ms. Ochoa.
NOTE: This opinion has not been published. It is provided to demonstrate how the court approaches the issues involved in the case. It cannot be cited as authority to a court of law.
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