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Pioneer State Mutual loses another squabble with its own insureds

Pioneer State Mutual refused to pay Underinsured Motorist Coverage to its own insureds, Joanne Long and Patrick Maloney, after they were injured in a car wreck.  The plaintiffs sued the at-fault driver, and with Pioneer State's consent, they settled with him in return for his payment of his insurance liability limits.  Since the at-fault's coverage was limited to $100,000.00 per incident, which Long and Maloney split equally, they asked Pioneer State for the balance of its $100,000.00 coverage, per injury, in Underinsured Motorist Coverage.  Pioneer refused to pay.  It argued that since it had now paid $100,000.00, total, it had "wiped out" its obligation to its insureds.  It argued that under the at-fault's policy, $100,000.00 was originally "available" to each of its insureds.  Therefore, the insurer's attorneys argued, regardless of whether the plaintiffs actually received that amount, the total limit of coverage must be deducted from Pioneer State's $100,000.00 "per injury" limit, leaving no balance due. 

Sadly, there is limited caselaw to support this convoluted claim, based on the Engler Majority's decision in Wilkie v. AutoOwners.  Nevertheless, the Court of Appeals in this case noted a significant difference in the language of the two policies, and that unlike AutoOwners, Pioneer State did not define what it owed in UIM coverage by the total limits "available" to an individual.   The Pioneer State policy utilized a formula whereby the UIM limit was reduced by "all sums paid" for individual damages. In this case $50,000.00 was paid on each individual claim, leaving a balance of $50,000.00 of maximum coverage.  Therefore, Pioneer State could not use the Wilkie case rationalization to eliminate its UIM obligation to its insureds. 
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