Opinion ID: 1985095
Heading Depth: 1
Heading Rank: 1

Heading: issues

Text: This appeal presents two (2) significant issues concerning underinsured motorist (UIM) coverage: (1) Mable Raines (Raines) incurred damages of $219,071.00 as a result of a two-vehicle accident caused by Lecia True (True), who had liability coverage of only $100,000.00. Raines, who was driving her own automobile at the time of the collision, had a $50,000.00 UIM policy, and Ted Rice (Rice), with whom Raines lived in a residence they jointly owned, had UIM coverage of $50,000.00 under a separate policy. Although Rice's policy did not list Raines as a named insured, Raines was listed on Rice's policy as a driver residing in your household. Was Raines entitled to recover UIM benefits under Rice's policy? Because Rice's policy was clear and unambiguous in its UIM coverage, and Raines was neither a named insured nor otherwise covered by Rice's policy while driving her own automobile, we hold that Raines was not entitled to recover UIM benefits under Rice's policy. (2) During the trial of this case, True's insurer, Kentucky Farm Bureau Mutual Insurance Company (Farm Bureau), offered to settle with Raines for the $100,000.00 policy limit. However, to preserve its subrogation rights, Raines's UIM insurer, Preferred Risk Mutual Insurance Company (Preferred Risk), agreed to make the $100,000.00 payment to Raines itself and thereby substitute its own funds for Farm Bureau's. The jury determined Raines's damages to be $219,071.00. Was True relieved from all liability in excess of her $100,000.00 liability coverage by virtue of Preferred Risk's substitution of funds? While Preferred Risk's substitution of funds operated to release True from any further personal liability to Raines, the substitution preserved Preferred Risk's subrogation rights against True and thereby subjected True to personal liability to Preferred Risk for any amount it paid to True under its UIM coverage.