Indiana Court of Appeals Reaffirms UIM Coverage Focuses on Individual Recovery, Not Aggregate Payouts: Best v. Standard Fire Insurance Co.

In a significant decision for personal injury claimants and insurance coverage law in Indiana, the Indiana Court of Appeals reaffirmed that whether a motor vehicle is “underinsured” depends on the amount of liability coverage actually available for payment to the individual claimant, rather than the aggregate payout disbursed by the tortfeasor’s insurer to multiple parties.

Writing for a unanimous panel in Brittney Best v. The Standard Fire Insurance Co. d/b/a Travelers Insurance and CSAA General Insurance Co. d/b/a AAA Insurance, Judge Vaidik reversed the Tipton Circuit Court’s dismissal of a mother’s underinsured motorist (UIM) claim, holding that a mother who received only half of a tortfeasor’s $100,000 per-person bodily injury limit following her son’s tragic death was entitled to pursue $50,000 in UIM benefits under her applicable policies.

Factual and Procedural Background

In August 2023, 17-year-old Jaxson Schooley was tragically killed when a vehicle crossed the center line and struck the car in which he was riding head-on. Jaxson’s parents, Brittney Best and Jeffrey Schooley, were never married, and Best maintained primary physical custody of Jaxson prior to his death.

The fatal collision implicated multiple insurance policies:

• The Tortfeasor’s Policy (State Farm): Had a bodily injury liability limit of $100,000 per person.
  
• The Host Vehicle’s Policy (CSAA / AAA Insurance): Provided UIM coverage with a $100,000 per-person limit.
  
• The Mother’s Family Policy (Standard Fire / Travelers Insurance): Provided UIM coverage with a $100,000 per-person limit.

It was undisputed that both Jaxson and Best qualified as insureds under both the AAA and Travelers policies.

One year after the crash, State Farm paid its full $100,000 per-person liability limit, splitting the payout equally between the parents—$50,000 to Best and $50,000 to Schooley. Because Best personally received only $50,000, she submitted UIM claims to AAA and Travelers for the remaining $50,000 balance under their $100,000 per-person limits.

When both insurers denied her claims, Best filed suit in the Tipton Circuit Court. AAA and Travelers moved to dismiss under Indiana Trial Rule 12(B)(6), contending that the tortfeasor was not underinsured because State Farm had paid an aggregate sum of $100,000 to resolve the singular wrongful death, matching the $100,000 UIM per-person coverage limits. Best moved for partial summary judgment, maintaining that statutory underinsurance is measured by what she personally received. The trial court agreed with the insurers and dismissed Best’s complaint.

The Appellate Holding: Measuring “Available for Payment”

On de novo review, the Indiana Court of Appeals reversed. The dispute centered on Indiana Code § 27-7-5-4(b), which defines an underinsured motor vehicle as one where liability limits “available for payment to the insured… are less than the limits for the insured’s underinsured motorist coverage”.

The Court anchored its analysis in controlling Indiana Supreme Court precedent:

1. Corr v. American Family Insurance Co. (Ind. 2002): The Supreme Court established that statutory UIM availability turns on what is “present or ready for immediate use by the insured,” focusing on the individual claimant rather than aggregate policy limits paid across multiple persons.
   
2. Lakes v. Grange Mutual Casualty Co. (Ind. 2012): The Supreme Court reiterated that “whether a vehicle is underinsured depends, in all cases, on whether the amount received from the tortfeasor’s policy is less than the per-person limits on UIM coverage”.

Applying these precedents, the Court held that the dispositive figure was $50,000—the amount Best personally recovered from State Farm. Because $50,000 is less than the $100,000 per-person UIM limits under both the Travelers and AAA policies, the tortfeasor’s car was underinsured as a matter of law.

Key Legal Insights: Contract vs. Tort and Policy Allocation

1. Clarifying Contractual UIM Rights vs. Child Wrongful Death Act (CWDA) Rules

The insurers relied on Hanna v. Indiana Farmers Mutual Insurance Co. (Ind. Ct. App. 2012) and the Child Wrongful Death Act (CWDA), Ind. Code § 34-23-2-1, to argue that wrongful death damages are capped at a single per-person recovery. Specifically, because the CWDA requires parents to bring a single, joint action for a child’s death, the insurers asserted that the death constitutes a single statutory injury subject to one collective per-person limit. Under their view, once State Farm paid its $100,000 limit to resolve that single wrongful death, the liability coverage fully matched the UIM coverage limits, eliminating any underinsured motorist exposure regardless of how the parents divided the proceeds.

The Court explicitly distinguished Hanna and clarified the boundary between statutory tort claims and insurance contracts:

• Distinguishing Hanna: In Hanna, two parents were covered under a single policy with one per-person limit for bodily injury sustained by one person (their child). In contrast, Best was evaluating individual availability across separate policies.
  
• Contract vs. Tort: UIM coverage represents a contractual cause of action against one’s own insurer governed by policy text and the UIM statute, whereas the CWDA governs statutory tort actions against third-party tortfeasors. Under Ind. Code § 34-23-2-1(j), the CWDA expressly does not affect or supersede other legal rights or contractual remedies. Therefore, procedural joinder requirements in wrongful death tort actions do not restrict an individual’s contractual UIM recovery.

2. Accepting Potential Allocation “Anomalies”

The insurers argued that allowing individual recovery could permit claimants to manipulate allocations to create UIM exposure. The Court noted that the Indiana Supreme Court had already addressed and accepted this possibility in Corr, concluding that looking to individual “available” amounts is far less problematic than leaving an underinsured motorist’s victim in a worse position than the victim of a wholly uninsured driver.

3. Remand on Insurer Allocation

The Court remanded the case for entry of partial summary judgment declaring Best entitled to $50,000 in UIM benefits. Because neither Travelers nor AAA had briefed or litigated how liability should be apportioned between them (e.g., primary vs. excess or pro-rata sharing) at the trial court level, the appellate court left the allocation of payment responsibility to the trial court on remand.

Key Takeaways for Policyholders & Practitioners

• Individual Claimant Focus: Insurers cannot combine settlements paid to multiple beneficiaries to deny UIM benefits. Eligibility under Ind. Code § 27-7-5-4(b) is determined strictly by the net amount the specific insured personally receives.
  
• Wrongful Death Claims Do Not Restrict Contract Rights: Joinder provisions under the Child Wrongful Death Act do not alter or defeat contractual rights under private UIM insurance policies.
  
• Multi-Policy Coordination: When multiple UIM coverages apply, practitioners should anticipate coverage allocation disputes between carriers and ensure primary/excess priorities are addressed during summary judgment proceedings.

You can read the full opinion here.