An Indiana court has ruled that Shelter Mutual Insurance Company isn’t entitled to a full $50,000 reimbursement after it fronted that amount to its insured, only to see a jury award a far lower sum. The decision reinforces a key rule under Indiana’s insurance law: when insurers make strategic payments to protect their legal footing, they’re not guaranteed to get it all back.
The ruling, issued April 28, 2025, by the Indiana Court of Appeals, stems from a 2018 car accident in Bartholomew County. Lee Naylor, the injured party, was insured by Shelter under a policy that included underinsured motorist (UIM) coverage with a $100,000 per-person limit. The other driver, Mary Siener, was covered by State Farm, which had a $50,000 per-person liability limit.
In 2022, State Farm offered to settle Naylor’s claim against Siener for the full $50,000. As required by Indiana law, Naylor’s lawyer informed Shelter of the offer and gave the company 30 days to match it—an option that lets a UIM insurer preserve its right to go after the other driver for reimbursement later. Shelter chose to advance the full amount.
The goal of that advance was simple: keep the case alive against Siener rather than letting her off the hook with a release. That’s standard practice under Indiana Code § 27-7-5-6, a statute designed to give UIM carriers a chance to recover what they pay out when another driver is at fault.
But Shelter’s bet didn’t pay off.
When the case finally reached trial in 2023, a jury awarded Naylor just $14,000 in damages - well below both the amount State Farm had offered and what Shelter had advanced. Shelter demanded State Farm repay the entire $50,000, arguing that it had acted based on State Farm’s settlement offer and should be made whole.
State Farm refused, reimbursing Shelter only the $14,000 - matching the jury’s verdict - and nothing more. Shelter sued.
In its April 28 opinion, the Court of Appeals sided with State Farm. The justices held that Shelter’s right to recover was capped by the actual damages awarded. The statute, they said, entitles a UIM insurer to recoup “the proceeds of any settlement or judgment” - not the full amount it fronted unless that amount is backed up by the final result.
The court emphasized that Shelter had preserved its subrogation rights by properly advancing the money. But preserving the right isn’t the same as securing a full return. The judges explained that Naylor had no legal claim beyond the $14,000 the jury awarded, and since Shelter stood in Naylor’s shoes, it couldn’t claim more either.
Shelter also tried to argue that it should recover under the principle of promissory estoppel, a legal concept that sometimes lets a party enforce a promise even in the absence of a formal agreement. But the court rejected that claim, distinguishing the case from a 2002 decision (Farm Bureau v. Allstate) where a reimbursement claim was upheld due to a statute-of-limitations issue that had unfairly barred recovery.
Here, the court found no injustice. Unlike in Farm Bureau, State Farm hadn’t made the payment request; it was Naylor who asked Shelter to match the offer. Shelter had the chance to protect itself, and did. But the final outcome - just $14,000 in damages - meant it had overpaid, and that risk fell on Shelter, not on State Farm.
“Settlement offers and statutory subrogation advances are gambles by both insurance companies to try to minimize exposure,” the opinion noted. “In this instance, Shelter took that gamble and lost.”
