Woman denied underinsured motorist benefits after Auto-Owners argued that her attorney did not secure written consent to settle with the wrongdoer

Ruth Rye bought Underinsured Motorist [UIM] Coverage from her carrier, Auto Owners, to protect her if she was hurt in a car accident caused by someone with inadequate insurance.  That turned out to be a good idea when she was badly hurt by a driver who carried only $100,000.00 in liability coverage.  The at-fault tortfeaser's company immediately offered her that coverage, and she took it.   She sued her carrier, then, attempting to collect some part of the $500,000.00 in UIM coverage she bought from Home Owners, the Auto Owners' subsidiary.  Auto Owners argued that she wasn't eligible to collect any UIM damages because she didn't comply with Auto Owners' rule requiring her to obtain the insurer's written consent before settling with the underlying "tortfeaser."

Since UIM coverage is not a mandatory no fault coverage, the Michigan Courts have held that insurers may include any exclusions, requirements, notice provisions or other obstacles they desire in the policy language.  And a few years ago, when insurance companies began to dominate the Michigan Supreme Court, the judges rejected the rule that insurance policies should be interpreted according to the "reasonable expectation of the insured."  Since this policy--as with most--required Auto Owners' consent in writing, and Rye didn't have it, her only argument was that Auto Owners should be "estopped" from denying her coverage because it failed to respond to her attorneys' repeated inquiries and unreasonably delayed granting consent.  The Court held that there was a "dearth" of evidence to support the latter claim and upheld the summary disposition of Rye's UIM claim.