Court Opinion

ID: 9755008
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:21:06.56212+00
Date Added: 2024-06-11T09:57:14.660859
License: Public Domain

FLANDERS, J.,
concurring.
I agree that, under the circumstances of this case, the insured’s failure to obtain his underinsured-motorist (UIM) insurer’s consent to settle with the tortfeasor should not preclude his ability to recover UIM benefits. But I would do so squarely on the basis that the UIM insurer has suffered no prejudice because of its insured’s failure to obtain its consent before settling with the tortfeasor’s insurer and the tort-feasor. Thus, I would apply the same rule in UIM cases involving an insured’s failure to obtain the UIM insurer’s consent to settle that applies in failure-to-timely-notify cases: unless the insurer can show resulting prejudice, the failure of the insured to obtain the UIM insurer’s consent should not bar the insured’s recovery under the UIM coverage provisions of the policy. See, e.g., Pennsylvania General Insurance Co. v. Becton, 475 A.2d 1032 (R.I.1984); Pickering v. American Employers Insurance Co., 109 R.I. 143, 282 A.2d 584 (1971). I realize that the Court rejected this approach in Manzo v. Amica Mutual Insurance Co., 666 A.2d 417 (R.I.1995), albeit it did so in a brief order that did not consider fully the merits of the no-prejudice approach embraced by our failure-to-timely-notify cases. But in reflecting upon this result, I believe that requiring the insurer to show prejudice in this context avoids the extreme forfeiture-of-coverage consequences that UIM insurance consumers would otherwise suffer in circumstances where no harm has occurred to the insurer because of its insured’s failure to obtain its consent before settling with the tortfeasor.
On the other hand, I do not believe that Arnica or other similarly situated UIM insurers have a duty to reply when their insureds request their approval to settle for the policy limits before any such settlement offers are actually pending. One critical purpose of the consent requirement is to allow the insurer to investigate whether the tortfeasor possesses sufficient assets beyond the policy limits to justify pursuing the lawsuit against the tortfea-sor. Thus, before agreeing to its insured’s proposal to settle for the policy limits and to release the tortfeasor(s) and the liability insurer(s) for any further damages that the insured may have sustained, the UIM insurer had the right to investigate the prospects for recovering a judgment from the tortfeasor over and above the available insurance coverage. Because the liability, damages, and collectability factors that must inform any sound judgment about whether to settle a lawsuit — including the alleged tortfeasor’s financial status — can and do often change dramatically during the potential multi-year life of a litigated matter, the UIM insurer should not have to respond to an insured’s premature consent-to-settlement request at the early stages of a lawsuit when a settlement offer is not yet even on the table. Any such rule requiring UIM insurers to respond to policy-limits settlement requests from their insureds before any such settlement offers are pending would result in needless, premature, and potentially meaningless asset searches; misinformed settlement decisions; and increased expenses to all concerned parties. By the same token, however, insureds who seek to recover under the UIM provisions of their own policies after settling with alleged tortfeasors and their insurers for the coverage limits of the tortfeasor’s liability policy without first obtaining their UIM insurer’s consent *277should not be barred from proceeding on their UIM coverage claims unless their failure to obtain consent prejudiced their UIM insurers.
Because Arnica was not prejudiced by the insured’s failure to obtain its consent before accepting the settlement offer in this case, I concur in the Court’s disposition of this appeal.