Fulmer v. Insura Property & Casualty Co., 94 Ohio St. 3d 85

Summary

The Ohio Supreme Court held that an insured satisfies an underinsured-motorist policy's exhaustion requirement by accepting any settlement amount from the tortfeasor while limiting the underinsured-motorist claim to damages exceeding the tortfeasor's available policy limits. The court further held that an insured's release of the tortfeasor does not bar recovery when the insurer received notice of the tentative settlement and had a reasonable opportunity to preserve its subrogation rights by paying the settlement amount. The court overruled paragraph five of Bogan v. Progressive Casualty Insurance Co., reversed the appellate judgment, and remanded.

Holdings

1. An insured satisfies an exhaustion requirement in an underinsured motorist policy when the tortfeasor's insurer commits to pay any settlement amount and the insured retains the right to pursue underinsured motorist benefits only for damages exceeding the tortfeasor's available policy limits. The insured need not prove that the difference between the settlement amount and the policy limits equals litigation savings.
2. When an insured gives the underinsurance carrier notice of a tentative settlement before releasing the tortfeasor and the insurer has a reasonable opportunity to preserve its subrogation rights by paying the settlement amount but does not do so, the release does not preclude recovery of underinsured motorist benefits.

Questions Presented

1. Whether an insured satisfies an exhaustion requirement in an underinsured motorist policy by accepting any settlement amount from the tortfeasor's insurer while limiting the underinsured motorist claim to damages exceeding the tortfeasor's available policy limits.
2. Whether an insurer may deny underinsured motorist benefits based on a subrogation clause when the insured gave notice of the tentative settlement and afforded the insurer a reasonable opportunity to preserve its subrogation rights by paying the settlement amount.

Disposition

reversed_and_remanded