OR Case Update: Dodging Attorney Fees: No Proof of Loss Without Limits in UIM Cases

In cases involving underinsured motorists (UIM) and personal injury protection benefits (PIP), Oregon allows insureds to recover attorney fees under ORS 742.061 if the insured sues the insurer and recovers more than the insurer offered to settle. Insurers can avoid paying attorney fees by sending a “safe harbor letter” to the insured after receiving “proof of loss.” The three necessary elements for a “safe harbor letter” are: (1) acknowledging acceptance of coverage of the UIM claim, (2) admitting that the only issues are damages and liability, and (3) stipulating to binding arbitration. Often the big question in the UIM context is, what constitutes “proof of loss” sufficient to trigger the obligation to send a “safe harbor letter?”

Claims Pointer: It is best practice to send a “safe harbor letter” as soon as you have any inclination of a potential UIM claim. However, sometimes an adjuster will not know about a potential UIM claim until well after an accident occurs and after an insured is threatening a lawsuit seeking attorney fees under ORS 742.061. When that happens, don’t panic. You may have an out if you did not receive “proof of loss.” In the following case, the Oregon Court of Appeals held that, in a UIM case in which the insured sought attorney fees, that an insurer did not receive proof of loss until they had received notice of the policy limits of the other driver involved in the accident. The Court held that knowledge that the Plaintiff was injured, that the insured had filed a PIP claim, and that the insured was represented by an attorney were not enough to constitute proof of loss.

Hall v. Speers, 267 Or App 639 (December 24, 2014).

On September 16, 2006, Hall was injured in an auto accident. Hall was insured with Allstate for personal injury protection and UIM coverage. Two days later, Hall notified Allstate that the accident had occurred and that she had been injured. On September 27, 2006, Plaintiff filed an...

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