This is one of the statutory options given to an uninsured motorist insurer. In this case, the UM carrier does not waive its subrogation rights against the at-fault driver. There is a legal basis for the position that an injured insured has prejudiced the UM insurer s substantive rights and thereby waived or forfeited any claim for uninsured motorist coverage benefits. Uninsured motorist coverage is first party coverage , and an insurer has the right of subrogation against the tortfeasor when the insurer pays the insured for a covered loss or damage. Maryland court decisions are clear as are the terms of many UM endorsements that the UM insurer is entitled to notice so it can protect its rights by intervening in the suit.
Settlement is entered into without the statutory provisions being followed.
The injured insured executes a release in favor of the at-fault driver. The UM carrier s subrogation right is extinguished prior to it deciding whatever to consent to the settlement or pay the at-fault driver s policy limits. Here is a typical situation. The injured insured is a 30-year old man who was seated as a passenger in a vehicle owned by a van service with UM coverage. The injured insured also filed suit against the UM insurer under a theory of breach of contract for failure to provide benefits under the UM provision of the policy.