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Legal Memorandum: Additional Settlement Payment by an Insurer

Issue: Whether an Additional Settlement Payment by an Insurer Has an Effect on the Underinsured Status of a Vehicle.

Area of Law: Insurance Law
Keywords: Insurer's additional Settlement Payment; Underinsured vehicle
Jurisdiction: Minnesota
Cited Cases: 638 N.W.2d 469; 474 N.W.2d 441; 428 N.W.2d 85
Cited Statutes: Minn. Stat. § 65B.43, subd. 17; Minn. Stat. § 65B.49, subd. 4a
Date: 05/01/2004

As the court noted in United States Automobile Association v. Morgan, No. C1-96-1933, 1997 WL 360595 (Minn. Ct. App. July 1, 1997), “[t]o make a UIM claim, the claimant must show that the vehicle causing the injury was underinsured.”  Id. at *2 (citing Broton v. W. Nat’l Mut. Ins. Co., 428 N.W.2d 85, 89 (Minn. 1988)) (emphasis added).  A vehicle is underinsured if the applicable liability policy’s limit is less than the amount needed to compensate the insured for his or her actual damages.  Id. (citing Minn. Stat.  SEQ CHAPTER h r 1§ 65B.43, subd. 17 (1996)). 

The Minnesota Court of Appeals considered a case remarkably similar to the present matter in Behr v. American Family Mutual Insurance Co., 638 N.W.2d 469 (Minn. Ct. App.), review denied (Minn. Apr. 23, 2002).  In Behr, the plaintiff was injured in an accident caused by the at-fault driver, Bates, whose liability insurer paid the plaintiff and his wife $100,000.  The Behrs also negotiated a second settlement with Bates’ employer’s insurer, United States Fidelity & Guaranty Company (USF&G), for about $400,000.  Id. at 471.  In Behr, as here, the employer denied that its $1,000,000 liability policy insured Bates’ vehicle because the employer did not own that automobile, but it decided to settle the claim anyhow to avoid litigation.  Id.*FN1 

After reaching this settlement, the Behrs brought an underinsured motorist action against their insurer, alleging that their damages exceeded […]

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