Credit to UIM Carrier Upheld (Again)

The case of Irving v. Progressive Specialty Ins. Co., No. 11-7594, 2012 WL 2912309 (E.D.Pa. July 17, 2012 McLaughlin) is the latest in the long line of Pennsylvania court decisions upholding exhaustion clauses in the underinsured motorists (UIM) portion of insurance policies as entitling the UIM carrier to a credit for the liability limits of the tortfeasor(s) in motor vehicle accident matters.

Ever since at least the case of Boyle v. Erie Ins. Co., 656 A.2d 941 (Pa.Super. 1995), the rule in Pennsylvania has been that, in order to pursue a UIM claim, the Plaintiff need not fully exhaust the tortfeasor's liability limits but must give the UIM carrier a credit for the full amount of the available liability limits.

In this case the Plaintiff sued the driver of the vehicle that struck his vehicle and also sued another driver who had allegedly "waved" the first defendant to proceed.  The Plaintiff settled his claim with the first defendant who struck his vehicle.  That settlement was for $15,000.

The Plaintiff put Progressive Insurance on notice of a UIM claim.  At that time, the remaining third party litigation was still pending against the defendant who had allegedly "waved" the first defendant to proceed.  Progressive asserted that it was entitled to a credit in the amount of the $15,000 limits of the first tortfeasor as well as the $300,000 in liability limits covering the "waving" defendant.  The Plaintiff disagreed and filed this declaratory judgment action.

The Irving court provided a nice summary of the line of Pennsylvania state and federal decisions upholding exhaustion clauses and, after reviewing the language of the exhaustion clause in this matter, ruled that Progressive was indeed entitled to a credit in the amount of both defendants' liability limits, i.e., $315,000 as opposed to only $15,000.

Here's a LINK to the Opinion in Irving v. Progressive.  Here is a LINK to the Order that goes with the Opinon.

I send thanks to Attorney Bill Mabius of the Pennsylvania Association for Justice for providing me with a copy of this decision.