When a person allegedly liable for the injury of a claimant “offers the limits of all liability insurance policies available to the party,” the Uninsured Motorist (UIM) statute provides an avenue through which the claimant may accept the offer but also “preserve the right to seek additional compensation from his or her UIM insurance carrier…” (internal citations omitted). In order to trigger the portion of the UIM Statute that requires a claimant’s insurance company to “elect to either participate in binding arbitration or decline arbitration and preserve its subrogation rights…,” the requirement that the insurance company of the person responsible for the injury notify the UIM carrier that the party is willing to cooperate with arbitration is mandatory, and the UIM carrier is not required to request this assurance.
In White v. State Farm Mutual Automobile Insurance Company, No. W2019-00918-COA-R3-CV (Tenn. Ct. App. Feb. 24, 2020), plaintiffs were injured in a car accident. The other driver was insured by USAA, who offered the limits of the driver’s policy as settlement for plaintiffs’ claims. Plaintiffs had car insurance with defendant State Farm, which included UIM coverage.
In April 2018, plaintiffs informed State Farm by letter that they intended “to settle with USAA for the liability insurance policy limits…[and that they] were willing to submit their UIM claim to arbitration and that they hoped to work amicably toward a settlement with State Farm.” The next month, State Farm responded that plaintiffs had permission to settle with USAA and that it was still evaluating the UIM claim. Two weeks later, State Farm told plaintiffs that “it would not offer a settlement for their UIM bodily injury coverage because State Farm believed [plaintiffs] had been fully compensated for their injuries.” Plaintiffs responded by invoking Tenn. Code Ann. § 56-7-1206 and stating that State Farm should “tender $25,000 to each insured in order to proceed to a jury trial or waive jury and go to arbitration.” State Farm responded that the provisions of the UIM statute had not been triggered.