OR Case Update: Is the UM/UIM Safe Harbor Waived when an Insurer Disputes all Damages and an Insured is Awarded Zero Dollars?

In an action based on an uninsured/underinsured (UM/UIM) motorist policy, does a “safe harbor” letter sent by the insurance company guarantee that some amount of damages must be awarded to its insured? Find out in this week’s case update.

Claims Pointer: According to the Oregon Court of Appeals, the Oregon UM/UIM safe harbor statute specifically contemplates an insurer’s ability to dispute the amount of damages owed to an insured. Thus, unlike a PIP claim, an insurer will continue to be within the scope of the safe harbor even if its challenge to the nature and extent of damages to an insured may result in zero recovery to the insured in his UM/UIM action.

Spearman v. Progressive Classic Ins. Co., 276 Or App 114 (January 27, 2016).

Alex Spearman (“Spearman”) was injured in a collision with an uninsured motorist and submitted a claim for UM benefits to his insurer, Progressive Classic Insurance Company (“Progressive”). Spearman filed the present action after the parties were unable to resolve the UM claim. His complaint sought recovery only for “unreimbursed” accident-related medical expenses, or expenses not already reimbursed under other coverage. Progressive admitted that Spearman sustained some injury in the collision, but disputed the nature and extent of Spearman’s injuries as well as the reasonableness and necessity of his accident-related medical expenses. The case was transferred to arbitration as the claim was under $50,000. The arbitrator found that Spearman was entitled to $6,022.80 under the UM policy and denied Spearman’s petition for attorney fees. The trial court upheld the arbitrator’s denial of attorney fees. Spearman appealed to the Oregon Court of Appeals alleging error in the denial of fees.

The Oregon Court of Appeals agreed with the trial court, concluding that Spearman was not entitled to attorney fees as Progressive’s pleadings disputed only the amount of Spearman’s damages and, therefore, were within the...

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