“Coots” notice requirements can be waived, period to advance not extended by information request: YOUNG V. KENTUCKY FARM BUREAU MUT. INS. CO (COA 4/11/2008)

INSURANCE:  Underinsured motorist benefits and notice of subrogationrights – formal requirements of certified mail can be waived by UIM carrier;  inaccurate information in notice does not toll period or vitiate the notice; and UIM’s request for additional information does not toll the 30-day period 
DATE RENDERED: 04/11/2008

This appeal addresses the waiver by the underinsured motorist carrier of the notice requirements under KRS 304.39-329(3) regarding subrogation rights and offer of limits (eg., the "Coots" Notice). Trial court granted summary judgment dismissing the claim for UIM benefits stating Kentucky Farm Bureau Mutual Insurance Company was not obligated to pay underinsured motorist (UIM) benefits to the Youngs because they failed to comply with the notification requirements contained in Kentucky Revised Statutes (KRS) 304.39-320(3). COA REVERSE the trial court’s award of summary judgment to Farm Bureau, and remanded.

The facts briefly were that KFBM received notice by first class mail of the tender of limits and rights of subrogation. The UIM carrier did not advance the proceeds within the 30 day period and wrote back requesting sufficient or additional documentation. The insureds brought action against underinsured motorist (UIM) carrier after settling tort claim and the Court of Appeals held KFBM had waived any defense based on failure to comply with statutory requirement to send notice of tort settlement by certified or registered mail, and the insured’s letter notifying carrier of tort settlement provided reasonable and sufficient notice despite potentially misleading content.

Request by underinsured motorist (UIM) carrier for more documentation does not toll thirty-day limitations period for carrier to permit insured to settle tort claim or advance settlement amount.

The letter from the claimant’s attorney contained inaccurate information as to the amount of the settlement and may have been grammatically incorrect, it did reference the statute and provide notice. There was no evidence of intent to mislead or bad faith by the attorney writing the letter. Insured’s letter with potentially misleading content that insured would receive $100,000 from proceeds of tort settlement provided reasonable and sufficient notice to underinsured motorist (UIM) carrier, and, thus, it was required to consent to settlement or advance settlement amount within thirty days, even though the settlement amount included $25,000 unrelated to tortfeasor’s liability policy; due diligence and a telephone call would have resolved the discrepancy, the discrepancy was not decisive to carrier’s decision, and the letter did not prejudice the carrier.

By Michael Stevens

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