Oregon Case Law Update: Insurer’s Safe Harbor Letter Insufficient to Express Consent to Binding Arbitration
From the Desk of Joshua P. Hayward: ORS 742.061(1) entitles a first-party plaintiff to attorney fees if the plaintiff’s ultimate recovery exceeds the amount previously tendered by the insurer. However, in the context of UM/UIM claims, ORS 742.061(3) provides that the insurers can protect themselves from exposure to attorney fees by sending the first-party plaintiff a “safe harbor” letter, which accepts coverage and agrees to binding arbitration on liability and damages. Read on to see how courts determine whether a “safe harbor” letter complies with the statutory requirements set out in ORS 742.061(3).
Claims Pointer: In this case arising out of an accident with an uninsured motorist, the Oregon Court of Appeals determined that the insurer’s letter was insufficient to invoke the “safe harbor” protection because the letter merely instructed the plaintiff that he could ask to have his claim be submitted to an arbitrator. This case serves as a reminder of the importance of erring on the side of caution by using a letter that mimics the precise wording set out in ORS 742.061(3).
Lizama v. Allstate Fire and Casualty Ins. Co., 292 Or App 611 (2018)
Plaintiff Luis Munoz Lizama (“Plaintiff”) was injured in a car accident with an uninsured driver. Following the accident, Plaintiff sought UM/UIM from his insurer, Allstate Fire and Casualty Insurance Company (“Allstate”). In response, Allstate sent Plaintiff a safe harbor letter, which included the following paragraph:
Once we have sufficient information that supports your client’s claim, we will make every attempt to reach a fair agreement on the amount of Uninsured or Underinsured Motorist benefits due under the policy. If for some reason we are not able to reach an agreement on the amount due, your client may request that [defendant] submit the claim to a third-party...