Why Do I Need the Underinsured Motorist (UIM) Insurance Company’s Permission to Settle With the Driver Who Caused the Accident?

Underinsured Motorist Insurance is optional coverage that you may purchase to cover yourself and/or the occupants of your vehicle in the event that another driver causes a collision that results in injury to you.  The rules of coverage are governed by the insurance policy. In every underinsured motorist policy there is a clause that requires you to ask the underinsured motorist insurance carrier’s permission before you settle with any third-party that may be liable, including the at fault driver.

Subrogation and the Permission to Settle Clause

In the standard auto policy, underinsured motorist coverage only kicks in to cover those damages you prove to a jury you are entitled to receive for which there is no other insurance coverage up to the full “limit” or amount of coverage you paid for in the policy.  Furthermore, within your policy is a right of subrogation clause that allows your insurance company to pursue your rights against any other driver who causes your injuries, assuming they have assets or insurance to cover the damages.  Thus, when there is other insurance coverage available, your insurance company has the right to offset this amount against the amount of damages a jury determines you are entitled to that the underinsured motorist company pays out.

Settling with the Tortfeasor

When you settle your claim against a third-party tortfeasor, you will be required to sign a release of your claims against that driver. (You shoulder never sign a release like this without having a lawyer review it first.) That release may relinquish not only your right pursue a claim, but also your insurance company’s right to bring a subrogation claim. If you do so, you may have inadvertently waived all or part of your right to file an underinsured motorist claim if that driver has: 1) more insurance coverage under the policy that you did not recover; 2) more insurance coverage under another policy or excess policy, or; 3) substantial assets from which a judgment could have been collected.

How Do I Get My UIM Insurance Carrier’s Permission To Settle?

In order to obtain your UIM carrier’s permission to settle, you should send a letter in writing to your UIM carrier that states:

“I was in an automobile collision on (date).  I anticipate that the liability insurance carrier will be offering their insurance policy limits and that I will be filing a UIM claim. I am requesting that you investigate this matter and provide me with written permission to settle for the insured’s policy limits without prejudicing my right to file a UIM claim.”

Your insurance company may request that you provide a declarations page or proof of coverage from the other insurance to prove the amount of the policy. You will need to request this from the liability insurance carrier.

Know Before You Settle

Before you settle a claim or sign any release with a third-party tortfeasor and/or his insurance company, you should seek and obtain written permission to settle from your own insurance carrier. Furthermore, before signing any release for property damage or bodily injury, you should have the release reviewed by a lawyer to be sure it is not waiving any other rights you are not aware of. At Simmons and Fletcher, P.C., we offer free consultations. Call us before you sign any release and potentially waive any rights.