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Carrier Must Pay UIM Offered By Mistake

Although plaintiff’s insurance carrier mistakenly offered underinsured motorist coverage policy limits, the carrier nevertheless is bound by its offer of $25,000 UIM policy limits, in addition to the $100,000 liability coverage offered by defendant in the underlying auto accident case, and the Hopewell Circuit Court grants plaintiff’s motion to enforce settlement in this case of first impression.

Farm Bureau, the alleged tortfeasor’s liability carrier, offered its $100,000 policy limits by letter of Nov. 16, 2010, “contingent upon a waiver of subrogation from all underinsured motorists carrier.” INS Insurance indicated on Nov. 24, 2010, that it would provide additional underinsured motorist coverage of the $25,000 policy limit. By letter Sept. 7, 2010 faxed and mailed to counsel for both carriers, plaintiff accepted the total settlement offer of $125,000. Counsel for INS indicates it refuses to pay its portion of $25,000 and related that INS made a unilateral mistake when it offered $25,000 to plaintiff because there was no underinsured motorist coverage in plaintiff’s policy. INS acknowledges it never withdrew the offer and never advised plaintiff the offer was made in error. Plaintiff filed this motion to enforce settlement.

Virginia has ruled that where an offer is made without any limitations as to time, unless accepted within a reasonable time, the law presumes it to be withdrawn, and a subsequent acceptance will impose no obligation on the proposer, although he has done no act and given no notice of its withdrawal.
There is no Virginia case law on point with this matter. Therefore, the court has looked to other states for guidance on the law. Contract law governs the enforceability of settlement agreements. Further, the court will enforce the settlement if all of the material terms of the bargain are agreed upon. When the facts are undisputed, the reasonableness of the time of acceptance is a question of law for the court.

The lapse of almost two years between the settlement offer by both Farm Bureau INS and plaintiff’s subsequent acceptance is not an unreasonable delay. While other states have ruled differently, the circumstances in this case differ from the non-binding cases from other jurisdictions. In Texas, for example, the Court of Appeals found that no contract for settlement was reached in a car accident insurance subrogation case between a plaintiff’s insurance company and the defendant driver. The authorized agent of the defendant tendered an offer for settlement of the case which plaintiff accepted 15 months later. Because there was no communication about the settlement other than the delayed acceptance, the acceptance was deemed unreasonable as a matter of law.

Because reasonableness is determined based on the circumstances in the case, such as accepted industry practices, the acceptance of an offer almost two years later is reasonable. It is common industry practice to treat offers from insurance carriers as open and continuing until they are withdrawn or rejected. Unlike the plaintiff in the Texas case, Christy v. Andrus, 722 S.W. 2d 822 (Tex. App. 1987), plaintiff’s counsel here communicated with INS’s claims adjuster and informed her that he and his client were still reviewing the offer and considering it. This communication indicates the offer was still open. The other cited persuasive cases do not concern settlement agreements in the context of the insurance industry.

Further, Farm Bureau’s contingency upon waiver of subrogation from all underinsured motorists carriers is irrelevant because no carriers exist in this case. INS has conceded that their offer of coverage for his policy was made in error. Also, plaintiff’s counsel’s letter of acceptance accepted the offer on the same terms as the insurance companies. The fact that the acceptance letter accepts INS’s $25,000 “policy limits” is still an acceptance of all of the offered terms because what was offered was a $25,000 policy limit for an underinsured motorist claim. Therefore, a meeting of the minds occurred.

Based on all the circumstances in this case, the acceptance of the settlement offer was made within a reasonable time. Thus, plaintiff’s Sept. 7, 2012 letter to both Farm Bureau and INS Insurance was an acceptance of the settlement agreement.

Plaintiff’s motion to enforce settlement is granted in the amount of $125,000, $100,000 of which is to come from Farm Bureau’s policy limits and $25,000 to come from INS Insurance Inc.

Calvert v. Gilbert (Lee) No. CL 11-00301, Nov. 9, 2012; Hopewell Cir.Ct.; Eric S. Jensen, Lowell A. Stanley, Kevin V. Logan, James R. Jebo for the parties. VLW 012-8-186, 4 pp.

VLW 012-8-186

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