Oregon Case Law Update: UM/UIM Insurer May Dispute Damages without Losing Safe Harbor

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Oregon Case Update: UM/UIM Insurer May Dispute Damages without Losing Safe Harbor

From the desk of Katie BuxmanOregon law provides for attorneys’ fees in PIP and UM/UIM claims if the insurer does not settle with its insured and the insured sues in court and recovers more than the insurer’s best offer.  However, the insurer can avoid an attorneys’ fee award by sending a “safe harbor” letter accepting coverage and agreeing to binding arbitration on a limited set of issues.  But where a UM/UIM insurer raises issues that could result in the insured receiving zero damages, do they lose the protections of the safe harbor? Read on to learn more.

Claims Pointer: In this case arising out of a UM dispute, the Oregon Supreme Court held that the UM/UIM insurer did not lose the safe harbor protections when it disputed the reasonableness and necessity of the insured’s damages because it did not raise issues beyond the damages due the insured. The case conclusively establishes the scope of the UM/UIM safe harbor, an important consideration for insurers and their attorneys alike.

Spearman v. Progressive Classic Insurance Company, 361 Or 584 (June 22, 2017)

After Alex Spearman (“Spearman”) was injured in a car accident with an uninsured motorist, he filed a proof of loss for UM benefits with his insurer, Progressive Classic Insurance Company (“Progressive”). Progressive responded with a letter accepting coverage and stating that the only remaining issues to be decided were liability of the uninsured motorist and damages due to Spearman. Progressive also consented to binding arbitration in the letter. Progressive paid some benefits, but the parties disputed the extent of the insurer’s UM liability. Spearman sued Progressive, alleging that he was stopped in traffic when the uninsured motorist struck him, and that he incurred medical expenses as a result of the accident that should have been reimbursed under his UM coverage. Progressive responded by...

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