Hamill v. Mid-Century Insurance (CA2 9/3/10)

The case presents a question of how UIM coverage applies when the underlying carrier waives its limits.

Hamill was hit by a car. He sued its driver; the jury awarded $165,000. State Farm, the defendant’s carrier, had a $100,000 policy limit but had waived it. It appealed the jury award but then settled with Hamill for $152,000.

Hamill made a UIM claim against his Mid-Century policy. The parties agreed to arbitrate and to offset any award by $134,259.59 (the opinion doesn’t mention the reason for that number). The arbitrator found that Hamill’s damages were $140,000 but that he was 10% at fault, so he awarded $126,000. Mid-Century therefore refused to pay anything and Hamill sued. The trial court granted summary judgment for Mid-Century. Hamill appealed; this opinion affirms.

UIM coverage applies, under the statute, when “the sum of the limits of liability under all bodily injury . . . liability insurance policies applicable at the time of the accident is less than the total damages,” § 20-259.01(G). Hamill argued that because $100,000 is less than $165,000 he was underinsured (and should receive $30,740.41, the difference between the jury award and the agreed offset; Mid-Century had stipulated that he could argue based on the jury award rather than the arbitration award). The court decides that “at the time of the accident” refers to the policy rather than to its limits; that’s a logical construction but for some reason the court says that the language “dictates” that result rather than that it has to construe it to get there. Because State Farm had waived the limits, Hamill was not underinsured. (But the court adds that State Farm did so before “both the jury verdict and Hamill‟s UIM demand to Mid-Century,” raising interesting questions about whether that makes a difference.)

Hamill made a similar argument based on the language of his policy, under which an underinsured vehicle is “insured . . . for bodily injury liability at the time of the accident [but] its limit for  . . .  is less than the amount of the insured person’s damages.” But the policy also limits UIM coverage by “[t]he amount of damages established but not recovered by any agreement, settlement, or judgment with or for the person or organization legally liable for the bodily injury” and says that the company “will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.” Viewed as a whole, this language also focuses on a policy, not specific limits, in force “at the time of the accident.” This time the court is a bit clearer that it is doing some (entirely sensible) construction, though it again says things that raise timing questions.

That is the important part of the opinion. Hamill raised a few other issues –  ranging from fact-specific to minor to ridiculous – that can safely be ignored. 

(link to opinion)