Opinion ID: 2633393
Heading Depth: 3
Heading Rank: 4

Heading: Curran and Barnhill Failed To Use Up Liability Coverage.

Text: Before Curran and Barnhill could proceed with their UIM claims, they were required to exhaust the underlying liability policy limits. Curran failed to obtain any payments, judgments or settlements from her husband's liability insurer. Indeed, Curran refused to even make a claim again Progressive and only made claims under her husband's and her own UIM policies. Consequently, Curran did not exhaust the liability policy limits. Barnhill, on the other hand, settled with the liability insurer for less than policy limits. Thus, the question in his case becomes whether settling a claim for less than policy limits amounts to exhaustion. We hold that it does not. As we have already discussed, AS 28.20.445(e)(1) requires liability coverage to be used up by payments, judgments or settlements; it does not provide that a claimant may exhaust underlying liability limits by crediting the UIM insurer. Even assuming that a sub-policy-limits settlement might be deemed to use up available coverage in some situations, [33] Barnhill has failed to show any exceptional circumstances that could justify a finding of constructive exhaustion in this case. Barnhill declined to settle with State Farm, the liability insurer, for a sum approaching policy limits. He then opted to take the case to trial. After losing at trial but winning a motion for a new trial, he decided to settle with State Farm for a sum considerably below policy limits. [34] Since Barnhill did not use up liability coverage by payments, judgments, or settlements and has shown no good reason to be excused from complying with the exhaustion requirement, he is precluded from pursuing a UIM claim.