Thank you for sharing!

Your article was successfully shared with the contacts you provided.
An injured police officer who settled his underinsured motorist claim with his employer’s insurance company without obtaining his personal insurer’s consent isn’t entitled to excess UIM coverage, Nationwide Insurance Co. argued Tuesday before the state Supreme Court. By settling his claim for $750,000 – short of the primary insurer’s $1 million policy limit – without seeking his personal insurer Nationwide’s consent, Upper Darby Township police Officer Paul Schneider extinguished Nationwide’s right to subrogate his claim and minimize its own exposure, said James C. Haggerty of Swartz Campbell in Philadelphia. S. Stanton Miller of Dunn & Miller in Media, Pa., argued that the Superior Court panel that ruled in Schneider’s favor saw the issue of consent from an excess UIM provider to settle with a primary provider as one of first impression. “The en banc Superior Court unanimously found that they were not expanding or deviating from the fair balance rationale,” Miller said. He added that Nationwide did not suffer any prejudice as a result of Schneider’s settlement, nor did it front any money. “They may never unless Mr. Schneider can prove his damages exceed $1.015 million,” Miller said. According to briefs filed in the case, Schneider was rear-ended while on police duty and sustained personal injuries. American Independent Insurance Co. insured the other motorist with a liability limit of $15,000. Schneider was also covered by a policy issued by Granite State Insurance Co. to Upper Darby Township that provided $1 million in UIM coverage. American Independent offered Schneider the $15,000 limit of liability. Schneider sought the consent of Granite State and accepted the other motorist’s policy limit. Schneider then made a claim for UIM benefits under the Granite State policy and accepted $750,000 in settlement. He did not seek consent from Nationwide and had not notified the company of the accident, Nationwide’s brief notes. Following his settlement with Granite State, Schneider made a claim for excess underinsured motorist benefits under his personal policy with Nationwide. Nationwide denied the claim and instituted a declaratory judgment action. The trial court found in favor of Nationwide. On appeal a three-judge panel of the Superior Court affirmed the trial court, but on Schneider’s motion for reconsideration, an en banc panel found in his favor. The Supreme Court granted allocatur to determine whether the Superior Court properly applied the coverage exhaustion rule and the consent to settle rule in its decision. Justices Seamus P. McCaffery and Debra M. Todd served on the Superior Court panel and recused themselves from hearing the arguments Tuesday. Haggerty argued the Superior Court’s 1989 decision in Daley-Sand v. West American Insurance Co. defined the manner in which a UIM insurer can address a request for consent to settle. The court held the insurer may either give its consent or refuse to consent and tender to the claimant the amount of settlement in exchange for an assignment of all claims to preserve its subrogation right. The Superior Court found in Archer v. State Farm that failure to seek consent barred the claimant from pursuing benefits. Later, in Nationwide v. Lehman, the court established that an insurer must demonstrate prejudice. Haggerty said that in Lehman, the settlement was for liability limits and the prejudice was the insurer’s inability to go after the personal assets of the tortfeasor. In Schneider, Nationwide’s prejudice was the difference between the first UIM policy limit and the amount Schneider accepted in settlement. “We were prejudiced by a failure to get the gap money,” Haggerty said. “If we had been notified we could have fronted our money and received an assignment.” By preserving its right of subrogation, Nationwide could recoup everything that it pays and never be “out of pocket,” Haggerty said. After the argument, Haggerty remarked that the court had been less lively than in recent insurance cases he has argued. Miller told the court that Nationwide, in its claim that it had been prejudiced by Schneider’s failure to exhaust the policy limits, failed to acknowledge the fair balance rationale the Superior Court has applied entitling Nationwide to credit for the full limits of Granite State’s policy.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.