When is a Pub an Uninsured Motorist? Payment by any at fault party reduces UM carrier's exposure.

The Tennessee Supreme Court's recent decision in Green v. Johnson clarifies any ambiguity on the issue of whether the exposure of an uninsured motorist (UM) carrier is reduced by any sum paid to a UM claimant by a non-motorist who is alleged to be at fault for an accident.

The plaintiff in Green was a pedestrian who was hit by a car driven by an intoxicated 18 year old. Green and her family brought suit against a number of parties, including the drunk driver and the owner of the tavern where the driver had been drinking prior to the accident. The plaintiffs also asserted a uninsured motorist claim against State Farm since the intoxicated driver was uninsured. Following the plaintiffs' settlement with the tavern owner, State Farm moved for summary judgment on the basis that it was entitled to a credit for the settlement funds paid by the tavern to the plaintiffs. Since the tavern's contribution was more than State Farm's UM limits, the carrier contended it had no exposure under the policy. The plaintiffs unsuccessfully argued that State Farm was not entitled to a set-off since the tavern was not a "motorist."

Affirming the trial court's grant of summary judgment to State Farm, the Tennessee Supreme Court reviewed prior decisions and recent amendments to Tennessee's UM statutes. The bottom line is that a recovery from any party alleged to be at fault will reduce the UM carrier's liability. It does not make a difference that the party from whom the money is received is not the owner or operator of a vehicle (i.e. not an uninsured motorist or motorist at all).

Plaintiff's lawyers have to consider that asserting a claim against other potential at fault parties may not necessarily increase the net recovery for their clients since any payment received from that party is going to reduce the UM carrier's exposure. Where the at fault driver is uninsured, or their liability coverage is less than the UM limits, UM carriers have an incentive to look carefully at asserting the fault of any non-motorists who are arguably at fault since any payments by those parties will reduce the UM carriers exposure.

To view the Green opinion Click Here.