Indiana Court of Appeals concludes that Auto-Owners Insurance Company's underinsured motorist provision vague and ambiguous
In Auto-Owners Insurance Company v. Cathy Benko, et al., the Indiana Court of Appeals concluded that the plain language of an insured's underinsured motorist provision in the policy "would lead an ordinary policyholder to believe that they were required to bring a bodily injury claim against the alleged tortfeasor within the applicable statute of limitations."
A Starke County woman was involved in a motor vehicle collision on August 17, 2007, which resulted in her suffering personal injuries. She filed her lawsuit against the at fault driver on August 11, 2009, just several days before the 2-year statute of limitations ran. In September 2009, she received a policy limits settlement offer of $100,000 from the at fault driver's insurance company. She then notified her insurance company (Auto-Owners) of the settlement offer and in October 2009 notified Auto-Owners that she would be making an underinsured motorist claim on her auto insurance.
Auto-Owners' policy language stated:
a. TIME LIMITATION FOR ACTIONS AGAINST US
Any person seeking Uninsured or Underinsured Motorist Coverage must:
(1) present a claim for compensatory damages according to the terms and conditions of the policy; and
(2) conform with any applicable statute of limitations applying to bodily injury claims in the state in which the accident occurred.
Auto-Owners try to argue that the woman/their insured should not be allowed to proceed on her claim because she did not file her underinsured motorist claim against Auto-Owners on or before August 15, 2009 (deadline to file against at fault driver under Indiana statute of limitations).
The Indiana Court of Appeals ultimately determined:
We think that an ordinary policyholder would interpret the provision as requiring them to bring a claim for bodily injury against the alleged tortfeasor within the applicable statute of limitations, thereby protecting Auto-Owner's subrogation rights, and reimburse Auto-Owners out of the proceeds to the extent of Auto-Owner's prior payments. Otherwise, policyholders are basically required to bring a claim against Auto-Owners at the same time that they bring a claim against the alleged tortfeasor. While we recognize that this may have been Auto-Owners' intent, it should have stated so in plain English in its policy documents so that its policyholders know how to protect their interests and collect their benefits.