Erie Insurance Exchange v. Craighead: Protecting the Purpose of Underinsured Motorist Coverage

In a case determined in September 2022, the Indiana Court of Appeals decided an important and common issue for injury victims when dealing with their own insurance in its opinion in Erie Insurance Exchange v. Craighead. Many drivers who are injured as a result of an underinsured motorist turn to their own underinsured motorist coverage and medical payments coverage to help them recover. It is what they paid for and is there to protect them in the event they are injured by an underinsured motorist.

Medical payments coverage is a type of insurance coverage that helps pay for medical bills if injured in an accident. Underinsured motorist coverage provides coverage where an at-fault driver in a crash has liability insurance, but the available coverage to compensate the injured victim is less than the underinsured coverage available under the victim’s underinsured motorist coverage. Because many drivers take the road with the minimum required coverage under the law ($25,000 per person/$50,000 for any one accident), these two coverages are indispensable to protect yourself and your loved ones.

Because many insurance companies attempt to pay the least amount possible, even to their own policyholders, many insurance companies will attempt to set off the payments made from the medical payments coverage and reduce the amount of compensation available to the victim under the underinsured motorist coverage. This is just a small illustration of why it is important to have an experienced personal injury attorney who is willing to fight for injury victims and ensure they receive full and just compensation.

In the Erie case, the victim’s medical payments coverage was $10,000. The accident victim’s attorney sought and obtained the policy limits liability coverage from the at-fault driver for $50,000. Fortunately, the accident victim had additional coverage in their underinsured motorist coverage with a limit of $100,000. The victim’s attorney made a claim to Erie for this coverage. Instead of honoring its commitment to its insured, Erie claimed it was entitled to a $10,000 set off for the medical payments coverage it paid to the victim previously.

The Indiana Court of Appeals found that a set off for the medical payments coverage would not comport with the underlying purpose of underinsured motorist coverage which is to “fully indemnify victims of negligence in cases where the tortfeasor’s liability coverage is inadequate.” The medical payments coverage is unrelated to liability and would not serve the purpose of underinsured motorist coverage if the victim was not entitled to recover the full amount promised and made available under the underinsured motorist coverage.

One of the fundamental concepts in our legal system is that a victim should be put in the position where they would have been without the harm caused by a responsible party. Similarly, the Erie court opined the “goal is to guarantee that insureds are put in the position they would be in if the tortfeasor had purchased sufficient liability coverage.” Giving the insurer a set-off for non-liability medical payments would be inconsistent with that goal. The court rejected Erie’s argument and required it to pay the remaining $10,000 to the victim it attempted to set off.

Have You Been Injured in an Indiana Car Accident?

If you or a loved one has recently been injured in any kind of Indiana car accident, you should reach out to one of the dedicated Indiana car accident attorneys at the law firm of Parr Richey Frandsen Patterson Kruse. At Parr Richey Frandsen Patterson Kruse, we represent accident victims in Indiana in a wide range of personal injury cases. We pride ourselves on the unique form of client-centered representation we provide, and we take every effort to ensure that our clients are fully apprised of what is happening with their cases throughout the process. To learn more, call 888-532-7766 to schedule a free consultation today.


The statements contained here are matters of opinion for general information purposes only and should not be considered by anyone as forming an attorney client relationship or advice for any particular legal matter of the reader. All readers should obtain legal advice for any specific legal matters.


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