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Glover v. Allstate Prop. & Cas. Ins. Co., 2020 WL 5951386 (Ind. 2020)

The Indiana Supreme Court recently addressed a case with multiple insurance issues.  Shelina Glover, a passenger in an automobile, died from a multi-car accident. Her estate settled claims against two responsible drivers who paid their policy limits totaling $75,000.  The estate then looked to Shelina’s own and her estranged husband’s (who was driving the vehicle in which she was riding) policies for underinsured motorist (“UIM”) coverage.  Each of these UIM insurers paid their policy limits of $25,000 for a total UIM recovery of $50,000.

Shortly before the accident, Shelina had moved into her parents’ home.  As a result of the accident, her estate also claimed that she was entitled to UIM coverage under her parents’ policy which had limits of $100,000.  The parents’ UIM insurer, Allstate, denied the claim on two grounds.  First, it contended that its policy required the parents to notify Allstate of Shelina living at the home to be afforded coverage. Because the parents had not done so, Allstate claimed she was not an insured under the policy.  Second, Allstate contended that pursuant to the “anti-stacking” and “offset” provisions of the policy, no additional UIM coverage was owed because the estate received $125,000 in payments ($75,000 in liability payments from the drivers and $50,000 from the other UIM insurers) which exceeded the $100,000 UIM limits under the Allstate policy.

After the estate brought a lawsuit against Allstate, the insurer moved for summary judgment.  The estate cross-moved for summary judgment by contending that it was entitled to an additional $25,000 of UIM coverage under the parents’ policy after deducting the $75,000 it received from the responsible parties.  The trial court granted summary judgment to Allstate on the offset provision but denied Allstate’s motion as to the parents’ failure to notify Allstate of the new living arrangements.  The Court of Appeals affirmed the setoff position, but did not address the residency issue.

The Supreme Court vacated the Court of Appeals’ decision and found for the estate on both issues.  With respect to the residency issue, the Court found that the evidence was clear that Shelina had moved back into her parents’ home.  In addressing Allstate’s argument that notification of her living with the parents was required, the Court rejected that argument because the policy language required notification “whenever an operator becomes a resident of the household.”  With no definition of “operator”, the Court interpreted that it did not apply to Shelina who was not driving the vehicle at the time of her accident.

With respect to the anti-stacking clause, the policy provided:

The liability limits shown on the Policy Declarations for Uninsured Motorist Insurance may not be added to the limits for similar coverage applying to other motor vehicles to determine the limit of insurance coverage available.

The estate argued that this language simply means that it can recover no more than $100,000 in aggregate UIM limits, and because it had only received $50,000 in UIM limits, it could recover an additional $50,000 in UIM limits from the parents’ policy with Allstate.

Allstate countered that another section of the policy was applicable and provided as follows:

If more than one policy applies to the accident on a primary basis, the total benefits payable to any one person will not exceed the maximum benefits payable by the policy with the highest limit of uninsured motorist coverage.

Allstate contended that this provision required a comparison of the insured’s receipt of total recovery, both liability and UIM settlement payments, and compared that figure to the highest UIM limit of any of the policies.  Thus, Allstate contended that because the estate received a total of $125,000 ($75,000 from the tortfeasors and $50,000 from the other UIM carriers), such amount exceeded the $100,000 of UIM coverage such that no additional UIM coverage was available.

The Court rejected Allstate’s argument as there was no evidence designated that more than one UIM policy was designated as a “primary” policy.  Secondly, the Court relied upon its affirmation of the decision of American Econ. Ins. Co. v. Motorist Mut. Ins. Co., 605 N.E.2d 162 (Ind. 1992).

Finally, the Court also refused to enforce Allstate’s “offset” provision which provides:

The limits of this Uninsured Motorist Insurance shall be reduced by . . . all amounts paid or payable by or on behalf of any person or organization that may be legally responsible for the bodily injury for which the payment is made.

Allstate contended that it was permitted to offset the total amount the estate received ($125,000) against the $100,000 of UIM limits.  The estate argued that Allstate was only entitled to offset the $75,000 which was paid by the tortfeasors as the “legally responsible” parties per the policy provision.  The Supreme Court agreed with the estate in that the only offset available was for the $75,000 paid by the liability insurers for the tortfeasors, as they were the only “legally responsible” parties.  The payments that the estate received from the other UIM insurers were not payments made by “legally responsible” entities.

This decision offers the Indiana Supreme Court’s interpretation of “legally responsible” entities in the offset policy provision.  The case does offer clarity on what will now be permitted by insurers to offset when an insured received payments from multiple sources following an accident.