Case Law Alerts
Tort law applies to proceedings that result from the automobile accident, and contract law governs only those aspects of the underinsured motorist claim that are not controlled by the resolution of facts arising from the accident.
An underinsured driver struck the insured-plaintiff's vehicle. The insured tendered bodily injury policy limits to her insurer, State Farm. The insured then offered, in writing, to settle with the insurer and kept the offer open for 30 days. When the insurer rejected the settlement offer, the parties proceeded to a jury trial. The jury awarded the insured compensatory damages in excess of the tortfeasor's bodily injury coverage. The insured appealed a judgment by the Superior Court of the State of Delaware that denied his motion for prejudgment interest. On appeal, the Delaware Supreme Court held that "tort law applies to proceedings that result from the accident, and contract law governs only those aspects of the underinsured motorist claim that are not controlled by the resolution of facts arising from the accident." The Court noted that the legislative intent of § 2301(d), governing prejudgment interest, is to foster settlement of claims under the threat of awarding prejudgment interest. Here, State Farm did not contest insurance coverage or liability. Rather it only contested the plaintiff's compensatory damages, a tort issue. As the insured satisfied the requirements under § 2301(d) in making a written offer in writing and leaving it open for 30 days, the trial court erred in denying the insured's motion for prejudgment interest.
Case Law Alert - 2nd Qtr 2010