Oregon Case Law Update: Court Rules Letter Insufficient to Entitle the Insurer to the “Safe Harbor” Protection

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Oregon Case Law Update: Court Rules Letter Insufficient to Entitle the Insurer to the “Safe Harbor” Protection 

From the desk of Josh Hayward: Under ORS 742.061(1), a first party plaintiff is entitled to attorney fees if they recover on a first party claim.  However, in the underinsured motorist (“UIM”) context, the insurer can avoid paying attorney fees so long as the insurer sends a “safe harbor” letter within six months from the proof of loss.  The “safe harbor” letter must state that the insurer accepts coverage, the insurer consents to binding arbitration, and that the only issues are liability and damages.  Will a letter stating that damages and liability are the “focus” of the claim be sufficient to invoke the “safe harbor” protection? Read on to find out.

Claims Pointer: In this case arising out of injuries sustained in a motor vehicle accident, the court held that a letter committing to “focus” on the issues of liability and damages is insufficient to entitle the insurer to the “safe harbor” protection.  Instead, the insurer must commit to limit the issues solely to damages and liability of the underinsured.  This case serves as a reminder the importance of a clearly written “safe harbor” letter.

Daniels v Allstate Fire and Casualty Company, 289 Or App 698 (2018)

This case arose from injuries suffered by Danny Daniels (“Plaintiff”) in a car accident.  Following the accident, Plaintiff notified his insurer, Allstate Fire and Casualty Company (“Allstate”) of his claim that sought to recover underinsured motorist (“UIM”) benefits.  In response, Allstate sent Plaintiff a “safe harbor” letter, agreeing to submit the case to binding arbitration, and stating that “[w]e will now focus our efforts on liability issues and damages related to this claim.”  After Plaintiff settled his claim against the at-fault driver, he filed suit against Allstate for damages he incurred in the accident.  Following...

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