Key takeaways
- Indiana Code 27-7-5-6[2] requires written notice of a bona fide settlement offer for its underinsured-motorist subrogation procedure.
- The notice must include certification of the underinsured motorist’s liability coverage limits.
- The insurer has 30 days after receiving the qualifying notice to advance an amount equal to the offer.
- The statutory procedure does not rewrite the UIM policy or control the scope of the settlement release.
- A settlement can affect the UIM claim even when the statutory notice issue has been addressed.
What does Indiana Code 27-7-5-6[1] cover?
Indiana Code 27-7-5-6[1](a) permits a UM or UIM policy or endorsement to provide that payment operates to subrogate the insurer to the insured’s recovery rights. Subsection 6(b) then states when an insurer providing UIM coverage has no subrogation right against the underinsured motorist.
Section 6 addresses subrogation. It does not state that completing its procedure establishes every element of UIM coverage or requires a UIM payment.
Is the other vehicle underinsured under Indiana law?
Indiana Code 27-7-5-4(b)[3] defines an underinsured motor vehicle by comparing the bodily-injury liability limits available for payment to the insured with the insured’s UIM limits at the time of the accident.
In Kearschner v. American Family Mutual Insurance Company, S.I.[4], the Indiana Court of Appeals applied that limits comparison and explained that the claimant’s damages alone do not determine whether a vehicle is underinsured.
For background, see this companion explainer.
How does the statutory notice and advance process work?
In Hornberger v. Farm Bureau Insurance[5], the Indiana Court of Appeals explained that notice of a liability-limits tender was not enough when no bona fide settlement offer or agreement yet existed between the insured and the underinsured motorist.
| Stage | What Section 6 requires or provides |
|---|---|
| Bona fide offer | There is a bona fide offer of agreement or settlement between the insured and the underinsured motorist. |
| Written notice | The insured gives the UIM insurer written notice that informs it of the offer. |
| Certification | The notice includes certification of the underinsured motorist’s liability coverage limits. |
| Advance period | The insurer has 30 days after receiving the qualifying notice to advance an amount equal to the offer. |
| No timely advance | The insurer has no subrogation right against the underinsured motorist. |
| Timely advance | The insurer is entitled to the full subrogation rights provided in its policy or endorsement. |
The 30-day period begins when the insurer receives notice satisfying Section 6(b)(1), including the certification required by Section 6(b)(1)(B).
Why do the release and UIM policy still matter?
Indiana cases show that the statutory subrogation procedure is not the only issue. In Dulworth v. Bermudez[6], an all-encompassing release barred the insured’s claim against the UIM insurer, and the insured’s failure to satisfy the policy’s exhaustion-by-payment language also barred UIM benefits.
In the memorandum decision Hartwell v. Indiana Insurance Company[7], the Court of Appeals held that a release was ambiguous about whether it also released the UIM insurer and reversed summary judgment for a trial on that issue.
Those decisions do not establish the result under a different release or policy. They show why the exact release language and the actual UIM policy must be reviewed before settlement.
See this related service page.
Does following Section 6 preserve every deadline?
No. In Shelter Mutual Insurance Company v. State Farm Mutual Automobile Insurance Company[8], the Indiana Court of Appeals stated that a policy-limits offer properly made and accepted under Section 6 still releases the tortfeasor if a lawsuit is not timely filed.
The statutory notice calendar therefore should not be treated as the only time-sensitive issue in the file.
What should be checked before accepting the settlement?
- The written settlement offer and complete proposed release.
- The declarations pages and complete UIM policy or endorsement.
- The written Section 6 notice and liability-limits certification.
- Proof of the date the UIM insurer received the qualifying notice.
- The record of any equal advance made within the 30-day period.
- The lawsuit deadline identified for the claim.
Compare those documents together. A compliant statutory notice does not cure a missed lawsuit deadline.
For additional settlement context, see the guide to reviewing a first Indiana settlement offer.
Frequently asked questions
Does Section 6 give blanket permission to settle?
No. It states when the UIM insurer loses its subrogation right against the underinsured motorist. The release and policy may present separate issues.
What must the written notice include?
The notice must inform the UIM insurer of the bona fide offer and include certification of the underinsured motorist’s liability coverage limits.
When does the 30-day period begin?
It begins when the insurer receives the qualifying notice.
What if the insurer does not make the advance within 30 days?
Under Section 6, the insurer has no subrogation right against the underinsured motorist.
Does completing the procedure automatically result in UIM payment?
No. Section 6 addresses subrogation, while the release, actual policy, and other governing law may present separate questions.
For a Fort Wayne or Allen County consultation, contact Delventhal Law Office.
This article provides general information about Indiana law and is not legal advice for a specific situation.
Sources
- Indiana Code 27-7-5-6 (iga.in.gov) ↩
- Indiana Code 27-7-5-6 (iga.in.gov) ↩
- Indiana Code 27-7-5-4(b) (iga.in.gov) ↩
- Kearschner v. American Family Mutual Insurance Company, S.I. (public.courts.in.gov) ↩
- Hornberger v. Farm Bureau Insurance (public.courts.in.gov) ↩
- Dulworth v. Bermudez (public.courts.in.gov) ↩
- Hartwell v. Indiana Insurance Company (public.courts.in.gov) ↩
- Shelter Mutual Insurance Company v. State Farm Mutual Automobile Insurance Company (public.courts.in.gov) ↩
