UIM Claims – Still No Bad Faith for Refusal to Settle, But….

by Nexsen Pruet, PLLC

Nexsen Pruet, PLLC

South Carolina has never recognized a bad faith cause of action based upon the failure of an underinsured (UIM) carrier to settle a UIM claim. Maintaining the established precedent, the United States District Court recently refused to recognize bad faith based on a UIM carrier’s refusal of  its insured’s settlement offer. Significantly, based upon the merits of the case, the court also refused to certify to the SC Supreme Court the pivotal question of whether SC recognizes a bad faith claim in such circumstances. Henry v. Government Employees Insurance Company, 2017 WL 3328229 (August 3, 2017).

Henry was a passenger in his employer’s truck, and sustained injuries when the truck was rear-ended by an underinsured motorist. His employer’s UIM policy, issued by GEICO, included the standard offset language providing any sums the insured was entitled to recover would be offset by any amount the insured received from the underinsured driver and other sources, including workers’ compensation. Henry’s medical bills totaled $10,617.71. Henry’s doctor indicated Henry was able to return to work, without accommodation, a little more than a month after the accident. Despite the doctor’s position, Henry remained out of work for more than a year. He received $25,395.61 in worker’s compensation benefits and the $25,000.00 liability policy limit on behalf of the underinsured driver. Henry then sued GEICO for the $25,000.00 in UIM coverage. Weighing several factors, GEICO was doubtful a jury would award Henry sufficient damages to exceed the setoff. As a result, it offered Henry $2,500.00 in response to his last demand of $5,000. Unable to resolve the claim, the case was tried to a jury that awarded Henry $250,000.00, following which GEICO tendered its UIM limits. Henry sued GEICO for bad faith seeking payment of the excess verdict, costs of trial and punitive damages. GEICO filed its motion for summary judgment and Henry filed a motion seeking certification of two questions; whether SC recognizes a bad faith cause of action for a UIM insurer’s failure to settle a claim and if so, what damages are recoverable.

The court found no genuine dispute of material fact as to whether GEICO acted in bad faith or if it had reasonable grounds for its valuation of the claim. GEICO considered the medical expenses and lost wages that were well below the offset, and valued the claim accordingly. While its prediction as to what a jury might award was wrong, that does not establish GEICO acted unreasonably or in bad faith. The court relies, in part, on the insignificant difference between Henry’s pretrial demand and GEICO’s offer as evidence it did not act unreasonably.  Additionally, the court found that if it were clear Henry suffered damages far greater than the amount of the setoff, there would be no rational reason for GEICO’s refusal of Henry’s demand of $5,000.00 just before trial. Further finding the questions Henry sought to certify were not outcome determination, the court denied his motion.

The law does not require a settlement offer be made to every insured with UIM coverage who files a claim against an at fault driver; bad faith is not necessarily established simply because a carrier forces someone to seek damages from the court. Some claims lack merit, and insurers must have the ability to protect themselves. See Snyder v. State Farm Mut. Auto Ins. Co. Additionally, finding an insurer acted in bad faith because it inaccurately predicted a jury award risks turning every case in which the parties disagree as to value in to one for bad faith refusal to pay. Thus far, the court is unwilling to take that risk. In assessing such claims, however, the insurer should remain mindful that once an insured brings suit against the at fault driver and serves the UIM carrier with process, the carrier’s duty to act in good faith regarding UIM benefits is triggered.  In Myers v. State Farm Mut. Auto. Ins. Co., Judge Blatt found support for the court’s position from other jurisdictions that hold there is a duty of good faith when investigating and processing a UIM claim. While there has been no recognition of a bad faith cause of action in a UIM claim, an insurer’s duty to act in good faith is not excused; if it is clear damages are greatly in excess of the at fault driver’s policy limits, the UIM carrier may have a duty to make a settlement offer prior to its insured securing a judgment against or exhausting the limits of the underinsured.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Nexsen Pruet, PLLC | Attorney Advertising

Written by:

Nexsen Pruet, PLLC

Nexsen Pruet, PLLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.