ATTORNEYS FOR APPELLANT

Timothy M. Swan

Jennifer E. Davis

Garan Lucow Miller, P.C.

Merrillville, Indiana

ATTORNEY FOR APPELLEE 

April L. Edwards

Boonville, Indiana

ATTORNEYS FOR AMICUS CURIAE, THE INDIANA TRIAL 

LAWYER’S ASSOCIATION

William E. Winingham

Jonathon B. Noyes

Willson Kehoe Winingham, LLC

Indianapolis, Indiana 

In the

Indiana Supreme Court 

No. 45S05-1605-CT-00253

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY,

Appellant (Defendant below),

v.

CAROL JAKUBOWICZ, individually

And as Parent and Legal Guardian of JACOB 

JAKUBOWICZ and JOSEPH JAKUBOWICZ,

minors, 

Appellees (Plaintiffs below).

Appeal from the Lake Circuit Court, No. 45C01-0810-CT-00156

The Honorable George C. Paras, Judge

On Petition to Transfer from the Indiana Court of Appeals, No. 45A05-1502-CT-00078

July 26, 2016

David, Justice.
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This matter involves the interpretation of an automobile insurance policy in the context of 

a personal injury lawsuit involving an underinsured motorist (UIM) claim. The policy at issue 

requires that a UIM claim be brought within three (3) years of the accident and also requires that 

the insured fully comply with all provisions of the policy prior to bringing suit. One such provision 

is that State Farm will only pay if the underinsured motorist’s insurance has been exhausted. 

Because the provision requiring an insured to bring suit within three (3) years is in direct conflict 

with the policy’s exhaustion requirement, we hold that the policy is ambiguous and thus, must be 

construed in favor of the insured. Accordingly, we affirm the trial court’s denial of State Farm’s 

motion for summary judgment. 

Facts and Procedural History

On August 2, 2007, the Jakubowiczs (mother, Carol, and her two sons) were involved in a 

car accident with Ronald Williams that resulted in substantial injuries to the Jakubowiczs. The 

Jakubowiczs were insured by State Farm. On October 7, 2008, Carol Jakubowicz filed suit against 

Williams (on her behalf and on behalf of her sons). State Farm also filed a complaint against 

Williams seeking damages for medical and property damage payments it made as a result of the 

accident. 

In December 2009, Jakubowicz put State Farm’s counsel on notice that she would likely 

pursue an underinsured motorist (UIM) claim. However, it wasn’t until March 2011, more than 

three (3) years after the accident, that Jakubowicz filed a motion for leave to amend her complaint 

and add a UIM claim against State Farm. In her motion for leave, Jakubowicz stated that she 

believed William’s insurance policy would be insufficient to cover her damages. The trial court 

granted Jakubowicz’s motion for leave to amend on July 27, 2011. 

Thereafter, State Farm moved for summary judgment on the UIM claim arguing that it was 

barred because it was filed after the three (3) year limitation period set forth in Jakubowicz’s 

insurance policy. Jakubowicz opposed State Farm’s motion, and the trial court it. The Court of 

Appeals accepted State Farm’s discretionary interlocutory appeal and reversed the trial court,

concluding that Jakubowicz’s insurance policy was unambiguous and further, that she failed to 

comply with the policy’s three (3) year limitation period for filing the UIM claim. State Farm 
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Mut. Auto. Ins. Co. v. Jakubowicz, 45 N.E.3d 500, 506 (Ind. Ct. App. 2015), vacated. Jakubowicz 

sought transfer, which we granted, thereby vacating the Court of Appeals opinion. Ind. App. Rule 

58(A). 

Standard of Review

Orders on summary judgment are reviewed de novo and require an appellate court to apply 

the same standard of review that is applied by the trial court. AM Gen. LLC v. Armour, 46 N.E.3d 

436, 439 (Ind. 2015) (citations omitted.) That is, to be entitled to summary judgment, the movant 

must demonstrate that “the designated evidence raises no genuine issue of material fact and that 

the moving party is entitled to judgment as a matter of law.” Id. The burden then shifts to the 

nonmoving party who must demonstrate that there is a genuine issue of material fact. Id. All 

reasonable inferences are construed in favor of the nonmoving party. Id.

Additionally, “[a]n insurance policy is a contract, and as such is subject to the same rules 

of construction as other contracts.” Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 251 (Ind. 

2005) (citations omitted). Interpretation of a contract is a pure question of law and thus, is

reviewed de novo. Harrison v. Thomas, 761 N.E.2d 816, 818 (Ind. 2002). 

Discussion

At issue in this case is whether the State Farm policy language, with regard to the procedure 

for an insured to bring an underinsured motorist claim against State Farm, is ambiguous. Insurance 

policies with directly conflicting terms are ambiguous. Wert v. Meridian Sec. Ins. Company, 997 

N.E.2d 1167, 1171 (Ind. Ct. App. 2013). Where there is ambiguity, insurance policies are 

construed strictly against the insurer, and the policy language is viewed from the standpoint of the 

insured. Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049, 1056 (Ind. 2001). This is especially 

true where the language in question purports to exclude coverage. USA Life One Ins. Co. of Ind. 

v. Nuckolls, 682 N.E.2d 534, 538 (Ind. 1997). Insurers are free to limit the coverage of their 

policies, but such limitations must be clearly expressed to be enforceable. W. Bend Mut. v. 

Keaton, 755 N.E.2d 652, 654 (Ind. Ct. App. 2001), trans. denied.” Where provisions limiting 

coverage are not clearly and plainly expressed, the policy will be construed most favorably to the 
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insured, to further the policy's basic purpose of indemnity.” Meridian Mut. Ins. Co. v. AutoOwners Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998). Furthermore, when construing the language 

of an insurance policy, a court “should construe the language of an insurance policy so as not to 

render any words, phrases or terms ineffective or meaningless.” Wert, 997 N.E.2d at 1170 (citation 

omitted). 

 

Here, the policy provides, in relevant part: 

Deciding Fault and Amount—. . . [UIM] Vehicle Coverage

1. a. The insured and we must agree to the answers to the following 

two questions:

(1) Is the insured legally entitled to recover compensatory 

damages from the owner or driver of the [UIM] vehicle?

(2) If the answer to 1.a.(1) above is yes, then what is the 

amount of the compensatory damages that the insured is legally 

entitled to recover from the owner or driver of the . . . [UIM] vehicle?

b. If there is no agreement on the answer to either question in 1.a 

above, then the insured shall:

(1) file a lawsuit, in a state or federal court that has 

jurisdiction against:

(a) us;

(b) the owner and driver of the . . . [UIM] vehicle:

(i) unless we have consented to a settlement offer proposed 

by or on behalf of such owner or driver; or

(ii) unless such owner or driver is unknown; and

(c) any other party or parties, who may be legally liable for 

the insured's damages;

(2) consent to a jury trial if requested by us;

(3) agree that we may contest the issues of liability and the 

amount of damages; and

(4) secure a judgment in that action. The judgment must be the 

final result of an actual trial and any appeals, if any appeals are 

taken.

* * * *

13. Legal Action Against Us

Legal action may not be brought against us until there has been full 

compliance with all the provisions of this policy. In addition, legal action 

may only be brought against us regarding: . . . 

c. . . . [UIM] Vehicle Coverage if the insured or that insured's 

legal representative within three years immediately following the date 

of the accident:
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(1) presents . . . an . . . [UIM] Vehicle Coverage claim to us; 

and

(2) files a lawsuit in accordance with the Deciding Fault 

and Amount provision of the involved coverage.

Except as provided in c.(2) above, no other legal action may be 

brought against us relating to . . . [UIM] Vehicle Coverage for any other 

causes of action that arise out of or are related to these coverages until 

there has been full compliance with the provisions titled Consent to 

Settlement and Deciding Fault and Amount. 

(Appellant’s App. at 159–60, 177–78) (some internal emphasis omitted). 

The policy also provides: 

[UIM] Vehicle Coverage 

We will pay compensatory damages for bodily injury an insured is 

legally entitled to recover from the owner or driver of an [UIM] 

vehicle. The bodily injury must be: 

a. sustained by an Insured, and 

b. caused by an accident that involves the operation, maintenance, or 

use of an [UIM] vehicle as a motor vehicle. 

We will pay only if the full amount of all available limits of all bodily 

injury liability bonds, policies, and self-insurance plans that apply to the 

insured’s bodily injury have been used up by payment of judgments or

settlements, or have been offered to the insured in writing.

(Appellant’s App. at 159.) 

State Farm sought summary judgment because Jakubowicz filed her UIM claim against 

State Farm outside of the three (3) year limitation period provided in the policy. The policy 

provides that a UIM claim against State Farm “may only be brought. . . within three years 

immediately following the date of the accident.” (Appellant’s App. at 177.) However, 

Jakubowicz argues the policy language is ambiguous, and as such, the limitation provision is 

unenforceable, because on one hand, the policy prohibits insureds from filing suit more than three 

(3) years after the date of the accident, and on the other, it requires that legal action may not be 

brought until there has been “full compliance with all the provisions of this policy.” (Id.) One 

such provision provides that: “We will pay only if the full amount of all available limits of all 

bodily injury liability bonds, policies, and self-insurance plans that apply to the insured’s bodily 

injury have been used up by payment of judgments or settlements, or have been offered to the 

insured in writing.” (Appellant’s App. at 159.) Jakubowicz argues that this amounts to an 
6

exhaustion requirement and as such, the policy language potentially requires insureds to file suit 

before they are in full compliance with the policy.1 Thus, as Amicus, the Indiana Trial Lawyer’s 

Association, observed: “[i]nsureds are simultaneously told that they must file a lawsuit and cannot 

file a lawsuit.” (Amicus Brief at 8.) 

Jakubowicz also argues that the exhaustion requirement in this case is substantially similar 

to the one in Wert. 997 N.E.2d at 1170-1171. In Wert, the Court of Appeals held that a Meridian 

insurance policy, which contained a two (2) year limitations period for pursuing an underinsured 

motorist claim, was ambiguous as to whether the insureds were required to first pursue a claim to 

recover the limits of the tortfeasor’s liability coverage prior to filing suit against their own insurer 

(Meridian). Id. at 1171. Specifically, in addition to the two (2) year limitations period, the Wert 

policy provided: “No legal action may be brought against us until there has been full compliance 

with the terms of the policy.” Wert, 997 N.E.2d at 1170. It also provided: “We will pay damages 

under this coverage . . .only if [the tortfeasor’s limits are exhausted.] Id. at 1171. The Wert panel 

found that because the exhaustion requirement was in direct conflict with the two (2) years 

limitations period, the policy was ambiguous. Id.

Here, the trial court denied State Farm's motion for summary judgment and seemingly 

agreed with Jakubowicz that the policy contained conflicting provisions, as it advised State Farm:

[Y]ou could have easily just written the policy to say if there’s an 

uninsured or [UIM] claim arising out of any incident, you must bring a 

 1 Jakubowicz also argues that holding that attorneys are required to file suit prior to expiration of the 

limitations period, but before they know if there is a UIM claim, would potentially cause attorneys to choose 

between Indiana Rule of Professional Conduct 3.1 and protecting their client’s interests. Indiana Rule of 

Professional Conduct 3.1 provides in relevant part: 

A lawyer shall not bring or defend a proceeding, or assert or controvert an issue 

therein, unless there is a basis in law and fact for doing so that is not frivolous, 

which includes a good faith argument for an extension, modification or reversal of 

existing law.

Because we hold that the policy language at issue is ambiguous, we need not address Jakubowicz’s 

argument in this regard. 
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cause of action against us in three years, period. End of story. Doesn’t 

have to say anything else but that. But, you chose to add all these other 

conditions and limiting factors. 

(Tr. at 35.)

However, the Court of Appeals reversed the trial court, distinguishing Wert from the 

present matter. It compared the policies and stated that “none of the language in State Farm’s 

policy would support Jakubowicz’s argument that she was required to wait before filing her claim 

against the underinsured motorist coverage until the limits of Williams’ insurance had been 

exhausted.” Jakubowicz, 45 N.E.3d at 505. It reasoned that the State Farm policy carves out an 

“exception” for a UIM claim. That is, while the State Farm policy requires Jakubowicz to attempt 

to settle (with State Farm) as to whether Jakubowicz is entitled to recover damages from the 

allegedly underinsured tortfeasor (here, Williams), this requirement does not prevent Jakubowicz 

from filing a lawsuit within the three (3) years. Instead, it provides that if Jakubowicz disagrees 

with State Farm about whether there is a UIM claim and the amount of such claim, then she “shall 

file a lawsuit[.]” Id. 

It is true that the State Farm policy contains a provision allowing for the parties to reach an 

agreement prior to filing suit and setting forth the procedure for filing suit, if necessary, that may 

not have been part of the policy in Wert. It is also true that this provision of the State Farm policy 

provides that the insured “shall” file suit if an agreement can be reached. However, it is unclear 

how the provision setting forth a procedure for attempting to resolve a UIM claim prior to filing 

suit creates a meaningful distinction between the two policies such that Jakubowicz would not be 

entitled to the same finding that the policy is ambiguous as in Wert. Indeed, the two policies are 

substantially similar. Both policies contain a limitations period for when the insured may bring a 

UIM claim. Both policies also contain provisions requiring full compliance with the policy and

exhaustion of the tortfeasor’s insurance prior to the insurer paying UIM damages. The language 

in the State Farm policy that the insured “shall” file suit is in direct conflict with other provisions 

of the policy that provide that the insured may not recover from State Farm until the insured is in 

full compliance with all policy provisions which includes exhaustion of the tortfeasor’s policy 

limits. 
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State Farm argues that the exhaustion provision does not impact whether and when a suit 

is filed, but only when an insured will be paid. Thus, it argues Jakubowicz could have filed suit 

prior to the three (3) year limitations period. However, this argument fails because the Wert policy 

also contains language that the insurer “will pay. . . only if” and yet, the Wert panel still found the 

policy to be ambiguous. Wert 997 N.E.2d at 1171. Further, under the terms of the State Farm 

policy, if the parties cannot agree, the only way for an insured to get paid is to file suit. Thus, 

payment is not as separate from filing suit as State Farm argues. 

State Farm also attempts to circumvent the exhaustion requirement by arguing that “full 

compliance” does not include exhaustion because the insured has no control over what the 

underinsured motorist will do or when the underinsured will exhaust their limits. (Response to 

Petition to Transfer at 4.) Thus, State Farm argues that an insured can be in full compliance with 

the policy provisions prior to the underinsured motorist’s insurance being exhausted. However, 

this reading of the policy language is a stretch. The policy makes no exception or carve-outs that 

allow for an insured to not exhaust the underinsured’s policy limits before filing suit. Instead, the 

language is unequivocal that State Farm will “pay only if” the tortfeasor’s policy limits are 

exhausted. (Appellant’s App. at 159.) This exhaustion requirement is in direct conflict with the 

requirement that Jakubowicz bring suit within three (3) years. 

Conclusion

Jakubowicz’s State Farm policy is substantially similar to the policy in Wert. Like the 

policy in Wert, Jakubowicz’s policy is ambiguous to extent that it contains conflicting provisions. 

As the trial court observed, the policy could have just stated that suit must be brought within three 

(3) years. The policy also could have called for exhaustion of the policy limits prior to filing a 

UIM claim against State Farm without a limitation on the time to do so. Instead, the policy 

contained a limitation period as well as additional conditions. Those conditions- that “[l]egal 

action may not be brought against us until there has been full compliance with all the provisions 

of this policy” and “[w]e will pay only if the full amount of all available limits of all bodily injury 

liability bonds, policies, and self-insurance plans that apply to the insured’s bodily injury have 
9

been used up by payment of judgments or settlements, or have been offered to the insured in 

writing” conflict with the three (3) year limitation period. (Appellant’s App. at 177, 159.) 

As State Farm observed, the insured has no control over whether or when the tortfeasor 

offers policy limits. Thus, there are situations, like in this case, where the insured cannot both 

exhaust the tortfeasor’s policy limits and file a UIM suit within the three (3) year limitation period. 

Ambiguous insurance policies are construed against the insurer. Accordingly, we affirm the trial 

court’s denial of State Farm’s motion for summary judgment and remand the matter for further 

proceedings consistent with this opinion.

Rush, C.J., Rucker, Massa and Slaughter, J.J., concur.