Insurer’s Settlement Check Only Pertained to Bodily Injury Payments and did not Waive its Subrogation Rights as to Property Damage Payments
In State Farm Mutual Auto Insurance Company v. Easterling, Frank Krupa (“Krupa”) was struck by a car driven by Sheena Easterling and owned by her mother and the defendant, Janet K. Easterling-Wiggins. State Farm Mutual Automobile Insurance Company (“State Farm”) paid Krupa’s medical expenses and property damage and then sought reimbursement through subrogation rights from defendant’s insurer. Krupa filed a personal injury suit against Sheena Easterling, the parties settled, and Krupa signed a general release. State Farm endorsed the settlement check. State Farm argues that the settlement check only covered damages for bodily injury; therefore, it still has subrogation rights for property damage.
The court reviewed whether State Farm’s limited power of attorney regarding the settlement check in the Krupa suit only pertained to bodily injury payment and did not waive its subrogation rights as to property damage payments.
Under Illinois law, waiver arises from an affirmative act, is consensual, and consists of an intentional relinquishment of a known right. A waiver may be either expressed or implied, arising from acts, words, conduct or knowledge of the insurer. When there is no dispute as to the material facts and only one reasonable inference can be drawn, it is a question of law as to whether waiver has been established. An insurer desiring to reserve its right against a second insurer must make this position clear in it correspondence with the second insurer. It is also considered good practice to include such reservation language in any settlement agreement or order, then provide a copy of it to the non-settling insurer.
The court held that State Farm did not commit any act that can reasonably be construed as a relinquishment of its property damage subrogation claim or that Krupa effectively released State Farm’s property damage subrogation claims.
State Farm Mut. Auto. Ins. Co. v. Easterling, 2014 IL App (1st) 133225.
