Superior Court County: Skagit. Superior Court Cause No: 94-2-00659-5. Date filed in Superior Court: September 12, 1994. Superior Court Judge Signing: Judge Stanley Bruhn.
Written by: Judge H. Joseph Coleman, Concurred by: Judge C. Kenneth Grosse, Judge Anne Ellington
COLEMAN, J. -- In this case, this court is asked to decide
whether an insurer may offset amounts it paid its insured as personal injury protection (PIP) benefits against amounts payable to the insured under an underinsured motorist (UIM) endorsement. We find that the insurance policy at issue here contains an unambiguous reimbursement clause that permits the insurer an offset. Accordingly, we reverse and remand.
Cline Price was injured in an automobile accident on March 30, 1991. He carried automobile insurance, with both PIP and UIM coverage, through Farmers Insurance Company of Washington. Farmers paid $24,339 in PIP benefits to cover Price's medical bills and lost wages. Price subsequently settled with the City of Concrete for $5,000 and with the tortfeasor's liability carrier for that policy's limit of $208,415.*fn1 Price requested additional compensation from Farmers under his UIM coverage. The parties did not agree on the amount of UIM compensation, and the issue was submitted to arbitration. The arbitrators reported that "the award in the above-referenced matter was $275,000 with [one of the arbitrators] dissenting."
Price sought confirmation of the arbitration award in the Skagit County Superior Court, arguing that Farmers owed him $66,585 in UIM benefits, the difference between the arbitration award and the settlement received under the tortfeasor's policy.*fn2 Farmers argued that the insurance policy allowed it to reduce the UIM amount by the amount of PIP benefits it had previously paid to Price. The policy contained the following provision (Right to Recover clause) in the section entitled "Conditions":
Our Right to Recover Payment
When a person has been paid damages by us under this policy and also recovers from another, we shall be reimbursed
to the extent of our payment after that person has been fully compensated for his or her loss.
The trial court ruled that the insurance policy did not allow an offset of PIP payments against UIM coverage and confirmed the arbitration award. Farmers' motion for reconsideration on this issue was denied.
The sole issue presented on appeal is whether the Right to Recover clause allows Farmers to offset PIP benefits against UIM benefits. When an insurance contract providing both PIP and UIM coverage does not include a clause allowing the insurer to offset PIP payments against UIM coverage, the contract contemplates that the insurer will make both payments without offset. When an insurance contract contains such a clause, that provision is given effect to the extent that the insured remains fully ...