Injured bus driver entitled to $25,000 under his insurance policy

The Indiana Supreme Court Thursday held that a man can recover the remaining $25,000 available to him under his underinsured motorist policy because he did not receive the full statutory minimum of $50,000 from the tortfeasor’s insurer.

Kathleen Wagner, an underinsured motorist, collided with an Indianapolis city bus driven by Howard Justice. He received a net compensation of nearly $72,000 in workers’ compensation from IndyGo’s insurer. He also received $25,000 from Wagner’s insurer.

Since his underinsured motorist policy with American Family Mutual Insurance Co. provided coverage up to $50,000 per person. When his insurer denied the claim, he sued for the $25,000. American Family claimed Justice wasn’t entitled to recover under the policy because the nearly $72,000 he received in workers’ compensation benefits operated as a “setoff” against the $50,000 policy limit, reducing the insurer’s liability to zero. The trial court granted American Family’s motion for summary judgment.

The Supreme Court found that the language unambiguously provides for a setoff against the policy limit, not against his total damages as Justice argued. As such, the policy limit is reduced to zero when factoring in the workers’ compensation and disability benefits, Justice Mark Massa wrote in Howard Justice v. American Family Insurance Company, 49S02-1303-PL-221.

But, the setoff provision contravenes Indiana Code 37-7-5-2, the justices held, so Justice is entitled to the remaining $25,000 available under his policy. The uninsured/underinsured motorist statute requires limits of not less than $50,000, and the statute is a mandatory, full-recovery remedial statute.

If Wagner had carried the required amount of liability insurance, Justice would have received $50,000, and the purpose of the statute is to put him in that position. Any policy provision to the contrary is unlawful and unenforceable, Massa wrote.

The justices remanded for further proceedings.

Chief Justice Brent Dickson concurred in part, but wrote that he believes the workers’ compensation setoff provision cannot apply to reduce benefits payable under the underinsured motorist policy because the policy expressly excludes coverage of injuries eligible for workers’ compensation.