Cline v. Everest Nat. Ins. Co.,
2026 Ind. App. LEXIS 176 (Ind. Ct. App. 2026)
Two employees of a company were seriously injured in an automobile accident caused by an underinsured motorist. Their employer possessed a commercial automobile policy with Everest National Insurance Company (“Everest”) that provided $1 million dollars per accident underinsured motorist (“UIM”) coverage limits. There was no “per person” limit under the policy.
The at-fault driver possessed a liability policy with liability limits of $150,000 per individual/$300,000 per accident. The at-fault driver’s insurer tendered $150,000 to each of the two employees for a collective total of $300,000.
As a result of the tortfeasor’s payment of its $300,000 in total liability limits, Everest relied upon its policy language to set off the full $300,000 from the $1 million dollar per accident UIM coverage limits. The policy language in question provided “[t]he Limit of Insurance under this [UIM] coverage shall be reduced by all sums paid or payable by or for anyone who is legally responsible.”
The employees disagreed with this policy interpretation. They filed a lawsuit contending that because each employee received $150,000 from the at-fault driver, there remained a total of $850,000 for each in UIM benefits. The employees argued that the Indiana Supreme Court’s decision in Lakes v. Grange Mut. Cas. Co., 964 N.E.2d 796 (Ind. 2012) required that UIM coverage calculations be performed on an individual claimant basis, irrespective of what the Everest policy language permits in the way of setoff from the UIM limits.
The Court of Appeals disagreed with the employees’ interpretation of the Lakes decision. It found that their position attempted to establish that there was a total of $1.7 million of UIM coverage limits available before setoff of the tortfeasor’s liability limits, instead of the $1 million dollars per accident that the policy provided. The Court of Appeals relied upon the Lakes decision and Indiana’s UIM statute, I.C. 27-7-5-5(c), to determine the minimum and the maximum amount of UIM coverages available, and it found that the Everest policy did not violate either. As a result, the Court enforced the Everest policy language allowing the set off the full $300,000 payment from the at-fault driver from the total UIM coverage limits of $1 million such that only $700,000 of UIM coverage was available. This decision illustrates the proper application of the policy language and the UIM statute.