In a huge win for Hoosiers across the state, Wilson Kehoe Winingham attorneys Bill Winingham and Jon Noyes helped secure a unanimous decision from the Indiana Supreme Court in State Farm Mutual Automobile Insurance Company v. Jakubowicz. The supreme court invalidated an underinsured motorist insurance policy provision that required Hoosiers to file a lawsuit seeking underinsured motorist benefits from State Farm within three years of the date they were injured. Additionally, State Farm required them to exhaust the negligent driver’s policy limits before filing a lawsuit.

Underinsured motorist coverage is so important to the public that our General Assembly requires it to be offered as part of every non-commercial automobile insurance policy. This is because the coverage is purchased by Hoosiers to help them when they are injured by a negligent motorist who possesses inadequate liability insurance. After the insureds are offered or awarded the negligent motorist’s policy limits, they can make a claim against their own insurer to compensate the difference of their underinsured motorist policy limits and the negligent motorist’s policy limits. In essence, the insurer agrees to stand in the shoes of the negligent motorist in order to compensate the insured.

Bill and Jon argued that upholding State Farm’s policy provisions would cause Hoosiers to lose the insurance that they paid for through no fault of their own. It is typical for underinsured motorist coverage policies to contain “exhaustion clauses,” which require the insured to exhaust the negligent motorist’s liability policy limits through settlement or trial before a claim for underinsured motorist insurance benefits can be made. However, it is unfair to also require the insured to exhaust the negligent motorist’s policy limits within a period of time after his or her injuries. Exhausting the negligent motorist’s liability coverage often requires a lawsuit to be filed against the motorist. The insured has no control over whether or not the negligent motorist offers his or her policy limits and it can take years to obtain the limits at trial.

The Indiana Supreme Court agreed. It noted, “there are situations, like in this case, where the insured cannot both exhaust the tortfeasor’s policy limits and file a UIM suit within the three (3) year limitation period.” As a result, the court concluded that the “exhaustion requirement is in direct conflict with the requirement that [the insured] bring suit within three (3) years.”

Bill and Jon served as amicus curiae (friends of the court) for the Indiana Trial Lawyers Association.

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