Setoff Provisions
Plaintiff sustained injuries after being struck by an automobile. Plaintiff settled with tortfeasor’s insurance policy for the full policy limit. ($50,000.00)
Plaintiff’s policy with Allstate included underinsured coverage and medical payment coverage. Allstate had already paid $38,952.53 in medical payment coverage. Plaintiff submitted a $50,000 claim for her injuries to Allstate which equaled her coverage less the settlement amount from State Farm. Allstate included in its setoff calculations the amount from the settlement and the amount already paid in medical payment coverage.
The trial court found that the policy allowed Allstate to setoff the UIM coverage by any settlement amount AND payments made under the medical payment coverage. On appeal, plaintiff claimed a violation of public policy when Allstate reduced its underinsured motorist coverage by the amounts paid for medical payments although the insurance policy unambiguously allowed for such reduction. The plaintiff claimed that Allstate is not entitled to a setoff because there was no danger of double recovery even if she received the limits of both the UIM and the medical payment coverage. The court held that there was no ambiguity in the policy and that a setoff provision is not contrary to any known public policy.
