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FAULK v. MOTORS INS. CORP.9/5/1997
e insured should not settle with the tort-feasor without first allowing the underinsured motorist insurance carrier a reasonable time within which to investigate the insured's claim and to notify its insured of its proposed action.
"(5) If the uninsured motorist insurance carrier refuses to consent to a settlement by its insured with the tort-feasor, or if the carrier denies the claim of its insured without a good faith investigation into its merits, or if the carrier does not conduct its investigation in a reasonable time, the carrier would, by any of those actions, waive any right to subrogation against the tort-feasor or the tort-feasor's insurer.
"(6) If the underinsured motorist insurance carrier wants to protect its subrogation rights, it must, within a reasonable time, and, in any event before the tort-feasor is released by the carrier's insured, advance to its insured an amount equal to the tort-feasor's settlement offer."
Lambert, 576 So.2d at 167.
In Jones v. Allstate Ins. Co., 601 So.2d 989, 990 (Ala. 1992), our supreme court discussed the application of Lambert, noting that the court had been "refining and balancing the rights of the insured and the insurer when underinsured motorist claims are involved, since United Services Automobile Association v. Allen, 519 So.2d 506 (Ala. 1988)." In Jones, the Supreme Court affirmed a summary judgment entered in favor of Allstate Insurance Company after the plaintiff had settled with an underinsured motorist without notifying Allstate about the proposed settlement and the terms of the release. In the case before us, the Faulks settled not with the motorist who injured them, but with the owner of the vehicle. The purpose of Alabama's Motor Vehicle Safety-Responsibility Act is to provide "for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles." § 32-7-23(a), Ala. Code 1975 (emphasis added). In light of that purpose, I believe that the procedures outlined in Lambert are equally applicable when an insured undertakes a settlement with the owner of an underinsured vehicle. The Humphrey and Clem cases were decided before Alabama law included underinsured vehicles within the term "uninsured motor vehicles," and they
involved settlements with insured tortfeasors who neither owned nor operated the uninsured vehicles. The Faulks settled with Staville and Progressive in December 1993; they did not notify MIC about the settlement until November 1994. They did not comply either with the unambiguous policy conditions or with the Lambert procedures.
I believe the trial court correctly concluded that the Faulks' ignorance of the existence of the underinsured motorist coverage available through MIC is irrelevant and that their failure to comply with the policy provisions and the Lambert guidelines precludes underinsured motorist coverage. I would affirm the summary judgment; therefore, I dissent.
CRAWLEY, J., concurs.
THOMPSON, Judge, dissenting.
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