Justices rule State Farm UIM policy ambiguous

July 26, 2016

A State Farm auto insurance policy’s language regarding uninsured motorist coverage is ambiguous, the Indiana Supreme Court ruled Tuesday, affirming a Lake Superior trial court’s denial of the insurer’s motion for summary judgment in a personal injury case.

Carol Jukubowicz and her two sons were in a 2007 car crash with Ronald Williams. By 2009, Jakubowicz put State Farm on notice she would likely pursue an underinsured motorist claim, which she did in 2011. State Farm moved for summary judgment citing language in the policy setting a three-year limit on the time allowed to file a UIM claim.

“The policy at issue requires that a UIM claim be brought within three (3) years of the accident and also requires that the insured fully comply with all provisions of the policy prior to bringing suit. One such provision is that State Farm will only pay if the underinsured motorist’s insurance has been exhausted," Justice Steven David wrote for the court in State Farm Mutual Automobile Insurance Company v. Carol Jakubowicz, individually and as Parent and Legal Guardian of Jacob Jakubowicz and Joseph Jakubowicz, minors, 45S05-1605-CT-253.

“Because the provision requiring an insured to bring suit within three (3) years is in direct conflict with the policy’s exhaustion requirement, we hold that the policy is ambiguous and thus, must be construed in favor of the insured. Accordingly, we affirm the trial court’s denial of State Farm’s motion for summary judgment.”

The unanimous court reached a different conclusion than the Indiana Court of Appeals, which unanimously reversed the trial court in October and ordered summary judgment on remand in favor of the insurer.

The Supreme Court based its holding on the ruling in Wert v. Meridian Sec. Ins. Company, 997 N.E.2d 1167, 1171 (Ind. Ct. App. 2013). “Jakubowicz’s State Farm policy is substantially similar to the policy in Wert. Like the policy in Wert, Jakubowicz’s policy is ambiguous to extent that it contains conflicting provisions. As the trial court observed, the policy could have just stated that suit must be brought within three (3) years. The policy also could have called for exhaustion of the policy limits prior to filing a UIM claim against State Farm without a limitation on the time to do so. Instead, the policy contained a limitation period as well as additional conditions. Those conditions … conflict with the three (3) year limitation period," David wrote.


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