Opinion ID: 1290952
Heading Depth: 2
Heading Rank: 2

Heading: Overview of UIM Coverage

Text: ¶ 28. Underinsured motorist coverage is intended to protect motorists against inadequately insured tortfeasors. 3 Widiss, Uninsured and Underinsured Motorist Insurance, § 31.4, at 5 (2d ed. 2001) (hereinafter Widiss, Uninsured and Underinsured Motorist Insurance ). Typically, it applies when the tortfeasor's policy has lower liability limits than the insured's UIM coverage. Anderson, Wisconsin Insurance Law, § 4.1, at 4-4 (4th ed. 1998) (hereinafter Anderson, Wisconsin Insurance Law ). [3] In Wisconsin, UIM coverage is optional, not mandatory. Id. ¶ 29. Under most UIM policies, UIM coverage is designed `to put the insured in the same position as he or she would have occupied had the tortfeasor's liability limits been the same as the underinsured motorist limits purchased by the insured.' State Farm Mut. Auto. Ins. Co. v. Langridge, 2004 WI 113, ¶ 17, 275 Wis. 2d 35, 683 N.W.2d 75 (quoting Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶ 17, 255 Wis. 2d 61, 647 N.W.2d 223). This type of policy has been authorized by the legislature, Wis. Stat. § 632.32(5)(i), and upheld by this court. Dowhower v. W. Bend Mut. Ins. Co., 2000 WI 73, ¶ 33, 236 Wis. 2d 113, 613 N.W.2d 557; Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 24, 245 Wis. 2d 134, 628 N.W.2d 916. ¶ 30. The Sentry policy clearly incorporates this approach. Therefore, in this case the Pittses could recover a maximum of $150,000 from Sentry under the UIM provisions of the policy because the Sentry policy's $250,000 limit is reduced by Knueppel's American Family policy limit of $100,000. ¶ 31. Sentry has never maintained that Pitts contributed to the cause of the accident. The Trust continues to deny Knueppel's negligence, but it did offer $40,000 above the $100,000 from American Family to settle the case. If Sentry had consented to the settlement between the Pittses and the Trust, it would have reduced its potential liability under the policy to $110,000. Sentry did not consent to the proposed settlement. Instead, it attempted to intervene as a defendant in the action between the Pittses and the Trust, seeking a once-and-for-all adjudication of the Pittses' damages that would be binding on the Pittses, Sentry, and the Trust. The Pittses opposed such a determination, believing that Vogt gives Sentry, the UIM insurer, only two options: to consent to the settlement or to substitute its own funds. We must now determine which of these competing interpretations is correct.