Car Accident UM Settlement

Brien Roche

Duty to Cooperate

Sometimes the UM/UIM carrier calls for some cooperation by the insured.  You need to look at Va. Code §38.2-2206.H which says that nothing may be required of the insured except the establishment of liability.  Nationwide Mutual v. Sours, 205 Va. 602, (1964)  After proper service on the UM/UIM carrier, the only thing to be done is to establish liability. As such your duties are to: serve the carrier and then establish liability. If the carrier calls for more than that, that request may be refused.

Car Accident UM Settlement

1. UM Cases

In settling UM cases, the process is fairly simple.  There may however be different layers of UM coverage, so you may have to deal with issues of getting consent of the different layers of coverage.

2. UIM Coverage

Settlement of UIM claims used to be very difficult.  There used to be a requirement that the UIM carrier had to consent.  That consent requirement has now been deleted.  A plaintiff can now settle with the liability insurer directly without the consent of the UIM carrier.  The release with the liability carrier  will only release that liability carrier and their insured, who is also referred to as the “underinsured motorist”.  Once the release is signed then the liability carrier has no further duties to its insured.  If the defendant does not sign the agreement, then notice must be given pursuant to Code section 38.2-2206L.  You should ask for a copy of the notice and proof that it was sent Certified Mail to the last known address.

     A.  Completing Discovery

There is some logic in completing your discovery before settling. Once you settle then the at fault driver is out of the case. They will probably be tough to deal with. Defense counsel has some control over them. However that control is minimal.

     B.  Settling with Liability Carrier

There is no obligation in the statute or the personal auto policy to notify the UIM carrier of your settlement with the liability carrier.  Your obligations are:  (1) to sign an effective Virginia Code section 38.2-2206(k) Release; (2) serve the UIM carrier; (3) obtain an enforceable judgment.  It’s probably a good idea to tell them what you’re doing so that you can negotiate with them but you have no obligation to do anything other than the two things referenced above.
If you’re dealing with a self-insured entity, all of these rules may change.

Likewise the underinsured motorist carrier has no right of subrogation against the underinsured motorist.  If the underinsured motorist fails to cooperate with the underinsured motorist’s carrier in the defense of the case then that carrier may pursue a claim for subrogation.

In addition the pertinent language in § 38.2-2206.K says that nothing in this Code section or in § 8.01-66.1:1 creates any duty on the part of any underinsured motorist carrier to defend any underinsured motorist.

If suit is filed then the at-fault motorist must be sued.  There probably is no requirement to actually serve that defendant but I think it may be a good practice to do so.  The alternative is to get some confirmation from the UIM lawyer that there is no need to serve the released defendant.  As to the released defendant, if that person has counsel, then keep that person on your Certificate of Service and send them all pertinent pleadings.  The underinsured motorist carrier is going to pick up any responsibility for that defendant.

     C.   Defendant is Deceased

They obviously can’t sign the release and can’t cooperate with the UIM carrier.  There probably is some logic in getting the consent of the UIM carrier to such a release and making sure that all of the provisions of Va. Code § 38.2-2206.K through N are incorporated.

     D.   Consent to Settle

There can arise a question where there are multiple UIM carriers involved as to whether or not you need the consent of all in order to settle.  To make that decision you need to review the policy carefully.  In addition you need to consider that the statute puts the cost of defense on all of the underinsured motorist carriers.  As such there is an argument that by settling with one, you have prejudiced the rights of the other to have that contribution from the settling underinsured motorist carrier.  Osborne v. National Union Fire, 251 Va. 53 (1996)  That may constitute prejudice to the second underinsured motorist carrier.

In a situation where you have more than one defendant, you probably cannot settle with one defendant without the consent of the UIM carrier.  That is, it’s conceivable that the combined liability coverages of the defendants may be sufficient to cover the judgment, in which event there would be no UIM exposure.  

Car Accident UM Settlement-Better Practice

The better practice in terms of dealing with UIM #2 is to see if they consent or at least do not object to settling with UIM #1.  If that’s not forthcoming:

Make sure that your release with the liability carrier requires that D cooperate with all UIM carriers.
Check your policy from UIM #2 to see if there is any consent requirement in that policy.
If you do settle without consent then your argument as to why no consent is required is the language in Va. Code section 38.2-2206K which says that settlement is “without prejudice as to any UIM benefits”; 38.2-2206K says that UIM carrier has no duty to defend the at-fault motorist and therefore all UIMs have the same responsibility or lack thereof and there can be no claim of prejudice; UIM #2 can still sue UIM #1 for defense costs if it feels as though it has been prejudiced in some way; if there is no consent requirement in the policy, then that speaks for itself.

     E.  Additional Things to do After Settling

Where suit has already been filed when you settle, then the suit simply remains as is.  If suit has not been filed, then you file suit against the defendant, defining that defendant as the “released defendant”.  If you obtain a judgment against the defendant, then the judgment is entered not in the name of the defendant but against the “Released Defendant” and any judgment should state that the UIM is liable for the judgment up to their limits.

The UIM carriers do not have to participate.  There is probably nothing you can do to make them participate.  If they do not participate and you want to force their hand, you may file a motion to preclude them from defending but that motion is probably not going to be granted as they have no obligation to defend.  If they don’t defend, then simply set the matter for trial and proceed to trial.

    F.  Preserving Claims Against Other Parties

In accepting UIM proceeds, you need to be careful that the underlying release of the defendant only releases that defendant and no other culpable parties.  In addition if the UIM carrier requires a release which typically they don’t, you want to make sure that release, and probably also the release with the underlying defendant, expressly indicate that there is no credit being given for the UIM proceeds.  In Llewellyn v. White, 297 Va. 588, 602 (2019), the court stated that there is no reason why the underlying defendant would get any such credit since it was the plaintiff who purchased the UIM coverage.

Car Accident UM Settlement-Contact Us

Call or contact us for a free consult. Also for more info on this issue see the Wikipedia pages and see UM coverage