A claimant's individual share of a liability payout, not the total, determines UIM eligibility, an Indiana appeals court ruled.
The case arose from an August 2023 head-on crash that killed a 17-year-old passenger. A driver heading the opposite direction crossed the center line and struck the car. The at-fault driver's insurer, State Farm, paid its full $100,000 per-person liability limit for the death, split evenly between the boy's unmarried parents - $50,000 each.
The mother was an insured under two separate policies with $100,000 per-person UIM coverage - a form of auto coverage that pays when the at-fault driver's insurance falls short. Her husband's Travelers policy covered her and her son, and an AAA policy covered the car the boy had been riding in. She claimed $50,000 in UIM benefits from each carrier - the gap between what she personally received and each policy's per-person limit. Both denied the claims. Once sued, both moved to dismiss.
The carriers argued the at-fault car was not underinsured because State Farm's total $100,000 payout matched their per-person limits. The trial court agreed and dismissed the suit.
On appeal, the three-judge panel applied the Indiana Supreme Court's holdings. Under those precedents, the test is what the individual claimant actually recovered from the at-fault driver's policy, compared against the per-person UIM limit. Because the mother received only $50,000 - half the $100,000 limit - the car qualified as underinsured.
The carriers warned the reading would let beneficiaries "manufacture UIM exposure by allocating a single tortfeasor payment among themselves in shares below the UIM limit." The panel acknowledged the concern but noted the Supreme Court had already accepted that outcome, treating the UIM statute as a "full-recovery, remedial measure" that prioritizes claimant recovery over insurer protection.
The court reversed the dismissal, directed entry of partial summary judgment declaring the mother entitled to $50,000 in UIM benefits, and remanded for a determination of how the liability should be apportioned between Travelers and AAA.
The decision reinforces that per-claimant arithmetic - not aggregate payouts - controls the UIM trigger in Indiana, a distinction that can surface additional exposure any time a single fatality produces more than one beneficiary.
