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Indiana Supreme Court Reviews Underinsured Motorist Coverage

The recovery of those injured by underinsured motorists in Indiana may be about to change. This is because the Indiana Supreme Court will soon rule on the appeal in Lakes v. Grange Mut. Cas. Co., 944 N.E.2d 509, 519 (Ind. Ct. App. 2011).

The case centers, naturally, on an automobile accident. Plaintiff Hannah Lakes and her family were injured, and sought to recover from the negligent driver who injured them. They also filed suit against Grange Mutual Casualty Company, the insurer of Hannah Lakes’ parents, seeking underinsured motorist coverage. After the negligent driver's insurance policy paid out its policy limits, all those injured except Hannah dismissed their legal claims. The only remaining claims in the lawsuit were thus Hannah's claims against Grange Mutual for underinsured motorist coverage.

The trial court held that there was no underinsured motorist coverage available. The court noted that multiple people were injured in the accident, and thus found that when the available per-person limits under the negligent driver's policy for each accident were combined, they reached the appropriate per-accident limit. The trial court held that it was irrelevant that all but one claimant had dismissed his claims, as each was still a victim and, in some sense, a potential claimant.

The Court of Appeals reversed, however, and held that there was underinsured coverage of $50,000 available under Indiana Code Section 27-7-5-2(a). The Court of Appeals found that because there was only one remaining claimant, the per-person limits of absent victims could not be aggregated to reach the per-accident limits. The Court of Appeals further held that the legislative history of Indiana’s uninsured and underinsured motorist law “manifests an intent by our Legislature to give insureds the opportunity for full compensation for injuries inflicted by financially irresponsible motorists.”

In deciding Lakes, the Court of Appeals noted that it had created a conflict with another panel opinion, Progressive Halcyon Ins. Co. v. Petty, 883 N.E.2d 854 (Ind. Ct. App. 2008). The Progressive court held that under Indiana law, the per-person mandatory limit for underinsured motorist coverage was $25,000, not $50,000. The court's reasoning was based on three factors: 1) a desire to avoid internal inconsistencies in Indiana's underinsured motorist law; 2) a desire to prevent insureds from colluding together to gain greater recovery; and 3) a belief that, despite its status as a full-recovery statute, Indiana's underinsured motorist law was not designed to provide full recovery to all victims.

Perhaps due to this conflict, the Indiana Supreme Court took the case and heard oral arguments in October, but has not yet ruled. Our Indiana personal injury attorneys eagerly await the forthcoming decision. The Indiana Supreme Court’s ruling will provide clarity in the area of underinsured motorist coverage. We also hope that the ruling will secure full recovery for the victims of negligent, but underinsured, drivers.

If you or a loved one have been injured by an underinsured driver, call 877•877•LAW2 (5292) or 219•924•2427 for a free consultation with our top personal injury attorneys.

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