State Farm loses another bid to deny UIM benefits to an insured who previously had to fight for PIP benefits
Most automobile policies sold in Michigan contain at least limited "Underinsured Motorist" Coverage (UIM) that enhances the coverage that an inadequately-insured at-fault may owe to the insured victims of a car accident. By law, all Michigan policies require the No Fault insurer to pay so-called PIP or Personal Injury Protection benefits (medical and limited wages). The latter benefit requirements were to be "liberally construed" to provide prompt payment of certain expenses, without the involvement of lawyers, in order to assure minimal compensation without litigation. Toward that end, insureds were also required to pursue PIP benefits within one year of incurring an expense. UIM benefits may not be identifiable for many months after litigation with the at-fault is commenced and a judgment is reached.
Despite the latter inconsistencies, State Farm and several other Michigan auto insurers have attempted to argue that an injured insured who successfully litigates his or her entitlement to PIP benefits in that first year is thereby prohibited from pursuing a UIM claim--because the damages arise "from the same transaction." This year the Court of Appeals has been forced to address this issue twice, and the insurers have lost on each occasion.
In Cynthia Adam v. Bell and State Farm, the unanimous panel of judges agreed with the reasoning and outcome of a prior decision and held that State Farm was over-reaching by attempting to apply the principle of res judicata to a subsequent UIM claim. The panel pointed out that the statutory obligation to pursue a PIP claim immediately was completely inconsistent with the proof requirements of a UIM claim, including the requirement of proving a threshold injury and damages that exceed the at-fault's coverage.