Opinion ID: 1668827
Heading Depth: 1
Heading Rank: 3

Heading: penalties and attorney fees for failure to pay the uninsured motorist claim

Text: La.R.S. 22:658 provides that all insurers issuing any type of contract other than life insurance and health and accident insurance shall pay the amount of any claim due any insured. Uninsured motorist coverage is a contract whereby the insurer agrees to pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured or underinsured motor vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or underinsured motor vehicle. Accordingly, La.R.S. 22:658 is applicable to an uninsured motorist claim. However, this statute is penal in nature and, consequently, must be strictly construed. Headrick v. Pennsylvania Millers Mutual Insurance Company, 257 La. 1101, 245 So.2d 324 (1971). Also, one who claims penalties and attorney fees has the burden of proving that the insurer has received satisfactory proof of loss as a necessary predicate to a showing that the insurer was arbitrary, capricious or without probable cause. Steadman v. Pearl Assurance Company, 242 La. 84, 134 So.2d 884 (1961). A satisfactory proof of loss within the meaning of La.R.S. 22:658 is that which is sufficient to fully apprise the insurer of the insured's claim. La.R.S. 22:1406(D)(1)(a) (uninsured motorist statute), which provisions govern the issuance of uninsured motorist coverage in this state, provides in pertinent part: No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in not less than the limits of bodily injury liability provided by the policy, under provisions filed with and approved by the commissioner of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom ; ... (Emphasis added.) In our view, the intent and effect of this provision is plain. A person insured under the uninsured motorist provision of a particular policy must establish that he is legally entitled to recover damages from the owner or operator of an uninsured or underinsured motor vehicle in order to obtain coverage thereunder. Breaux v. Government Emp. Ins. Co., 369 So.2d 1335 (La.1979). The words legally entitled to recover mean simply that the plaintiff must be able to establish fault on the part of the uninsured motorist which gives rise to damages and prove the extent of those damages. Booth v. Fireman's Fund Insurance Company, 253 La. 521, 218 So.2d 580 (1969). Accordingly, to establish a satisfactory proof of loss of an uninsured motorist claim, the insured must establish that the insurer receive sufficient facts which fully apprise the insurer that the owner or operator of the other vehicle involved in the accident was uninsured or underinsured, that he was at fault, that such fault gave rise to damages and establish the extent of those damages. In the instant case, we do not find that plaintiff carried her burden of proving that the insurer received a satisfactory proof of loss of her uninsured motorist claim. First, there was a genuine dispute as to who was at fault in the accident. Allstate's adjuster was informed by the insured that Karen Hart had switched lanes several times and that the accident occurred in the middle of both lanes. On the other hand, Willie Route related a substantially different version of the accident. The fact that Mr. Route admitted fault does not change these facts nor would such an admission be binding on Allstate. In addition, plaintiff and her daughter testified that they knew that Mr. Route had been drinking and plaintiff was in possession of information which indicated that Mr. Route was legally intoxicated at the time of the accident. Yet, this information was not relayed to Allstate so that it could properly evaluate her claim. Secondly, it was not until October 3, 1980, that plaintiff informed Allstate that Mr. Route was uninsured. Mr. Route had previously informed Allstate that he did not know offhand whether he had any insurance but would check his papers and call Allstate back. La.R.S. 22:1406(D)(6)(a-c) [5] provides a method whereby the insured may establish that the owner and operator of the vehicle involved did not have automobile liability insurance in effect on the date of the accident. Plaintiff made no effort to furnish this information to Allstate. Finally, plaintiff demanded the full policy limits of $5,000 for both herself and her daughter. The jury's verdict of $1,000 for plaintiff and $2,500 for her daughter established that she was clearly not legally entitled to the amounts she demanded. In sum, we conclude that plaintiff failed to prove that Allstate received a satisfactory proof of loss which fully apprised the insurer that she was legally entitled to recover from the uninsured motorist. Hence, the court of appeal did not err in reversing that part of the judgment of the trial court awarding penalties and attorney fees for failing to settle plaintiff's uninsured motorist claim. Having found that plaintiff is entitled to penalties and attorney fees for the failure of Allstate to timely pay the medical expenses, we must determine what a reasonable attorney fee would be for the prosecution and collection of this claim. Our review of the record reveals that a fee of $500 would be appropriate.