Oregon Court Analyzes "Proof of Loss" on UIM Claim

Oregon Court Analyzes “Proof of Loss” on UIM Claim

commercial insurance policy, Oregon, proof of loss, uim, underinsured motorist

On December 24, 2014, the Oregon Court of Appeals issued a published opinion in Hall v. Speer, 267 Or App 639, ___ P3d ___ (2014), concerning what constitutes a “proof of loss” for triggering an insurance company’s obligation to investigate a potential underinsured motorist (UIM) claim and, thus, an insured’s right to attorney fees under ORS 742.061. The case had been remanded to the Court of Appeals for consideration of the case in light of the Oregon Supreme Court decision in Zimmerman v Allstate Prop. and Cas. Ins. Co., 354 Or 271, 311 P3d 497 (2013). In applying the factors announced in Zimmerman, the Court of Appeals determined that the information provided by the insured in Hall failed to trigger an obligation to investigate the UIM claim and, thus, meant the insured was not entitled to attorney fees under ORS 742.061.

The Court of Appeals summarized the relevant timeline of facts as follows:

Sept. 16, 2006: The insured is injured in an automobile accident.
Sept. 18, 2006: The insured notifies the insurance company that she was injured in the accident.
Sept. 27, 2006: The insured submits to the insurer her application for PIP benefits, in which she described the accident and her injuries. With the exception of the heading, the PIP application is identical to the UIM application in all material respects.
Fall 2006: The insurer opens a PIP claim and notes that the allegedly at-fault driver carried liability insurance, but did not notify the UIM adjuster of the insured’s claim.
Feb. 5, 2007: At the insurer’s request, the insured was examined by a surgeon, who reported that the insured sustained significant injuries as a result of the accident.
May 24, 2007: The insured’s attorney wrote letters informing the insurer’s PIP adjuster and general liability adjuster that he represented the insured and requesting certain documentation.
Jan. 29, 2009: The UIM adjuster writes to the insured’s attorney indicating that the insurer accepted coverage of the UIM claim, that the remaining issues between the parties were liability and damages, and that if they were not able to reach a settlement, the insurer would be willing to submit to binding arbitration.

The insured declined arbitration and later obtained a jury verdict in excess of the insurance company’s settlement offer. The insured then petitioned the trial court for attorney fees under ORS 742.061. The insured argued to the trial court that the application for PIP benefits, together with the surgeon’s report and counsel’s letters to the insurance adjusters, constituted “proof of loss” for purposes of triggering the insurer’s obligation to investigate the UIM claim and right to attorney fees. The insurer argued that in a UIM case, the insurer does not have proof of loss until it knows the underinsured motorist’s liability limit and the nature of the insured’s injuries, which did not occur until approximately two months before the insurer’s acknowledgement of coverage and offer to arbitrate in January 2009.

The trial court ruled in favor of the insurer, finding that the information available to the insurer did not trigger the insurer’s obligation to investigate until shortly before the January 2009 offer. The Court of Appeals initially overruled the trial court’s decision, but the case was remanded for reconsideration in light of the Zimmerman decision. On reconsideration, the Court of Appeals affirmed the trial court.

Applying the Oregon Supreme Court’s holding in Zimmerman, the Court of Appeals concluded that the circumstances on which the insured relied to constitute her proof of loss were insufficient to trigger the insurer’s obligation to investigate, because the circumstances did not even suggest to the insurer the possibility of a UIM claim. The court pointed to the fact that the letters from insured’s attorney indicated only that he represented the insured, requested that future correspondence be directed through him, and requested certain information pertaining to the claim. Those letters—which did not suggest a UIM claim was possible—were distinguishable from the correspondence received by the insurer in Zimmerman and did not constitute proof of loss under ORS 742.061.

The attorneys at Maloney Lauersdorf Reiner frequently represent clients facing issues regarding underinsured motorist (UIM) coverage and right to attorney fees. Please contact us with any questions concerning this case or any other matter you see addressed on the Insurance Coverage Blog.