Vol. 4, No. 2, Pg. 22. How to Settle an Underinsured Motorist Claim.

South Carolina Lawyer

1992.

Vol. 4, No. 2, Pg. 22.

How to Settle an Underinsured Motorist Claim

22How to Settle an Underinsured Motorist ClaimThis article is an excerpt from a new book, The Law of Automobile Insurance in South Carolina (2nd ed.), by Burnet Maybank, Lee Jedziniak, Gene Covington and Jim Gray, to be published by the South Carolina Bar CLE Division.

Settling with the Liability Carrier

Most lawyers assume that an underinsured motorist carrier generally has no duty to pay underinsured benefits until the insured has recovered a judgment in excess of the at-fault driver's liability coverage.

The liability carrier, on the other hand, wants to obtain a full release to protect the interest of its insured and to limit the administrative defense costs. This often produces a "Catch 22" for the plaintiff's counsel: how to release the defendant and reserve the right to obtain an excess judgment against him or her--which will be necessary for the collection of underinsured motorist coverage?

Assuming the prerequisite of an excess judgment for the collection of underinsured motorist coverage, the settlement of the liability insurance portion of the claim must usually satisfy the following factors:

1. release of the liability insurance carrier and preservation of the right to obtain a judgment against the defendant to trigger collection of the underinsured coverage;

2. release of the personal exposure of the defendant; and

3. assumption of the duty to defend by the underinsured carrier.

* Release of the liability insurance carrier and preservation of the right to obtain a judgment. The claimant's lawyer must be satisfied that the liability carrier has no additional liability coverage or separate potential underinsured exposure before executing a full release.

For example, what if the defendant was operating a non-owned vehicle and had a separate policy of his or her own with the liability carrier. Or the defendant conceivably could have an excess or umbrella liability policy in addition to the vehicular policy. In both cases, a general release of the liability coverage without specific references to a particular policy could operate as a release of all liability policies. Moreover, the release of the liability carrier without collection of all potential liability coverage might allow the underinsured motorist carrier to argue...