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Arbitrators must comply with contractual requirements



The main issue in the consolidated appeals is the scope of a car insurance policy arbitration clause. Two insured with identical Allstate insurance company medical payments and uninsured / underinsured motor insurance (UIM) insured coverage with their respective claimants for applicable liability insurance limits and then made medical payments and UIM benefits to Allstate. Allstate and the insured were unable to resolve the UIM claims and went to arbitration under the required policy. The arbitral tribunals initially answered specific questions about the insured's accident-related injuries. At the request of the insured but over Allstate's objections, the panels later calculated what the panels believed Allstate ultimately owed the insured under their medical payments and UIM coverage and issued final awards.

Allstate Insurance Company v. Nathan Harbor, Allstate Insurance Company v. Kenneth N. Mattison, Supreme Court No. S-17307, Supreme Court No. S-17610 (Consolidated), No. 7545, Supreme Court of the State of Alaska ( July 23, 2021) The Supreme Court was asked to revoke the award of the arbitrators who exceeded their authority

INTRODUCTION

Allstate filed lawsuits to confirm the original damages, reject the final awards outside the arbitral tribunal's authority and pay the court to the insured according to their insurances. The judge assigned to both cases confirmed the final arbitration awards; Allstate appealed both decisions.

BASIC UIM CONCEPTS

Car insurance companies that issue personal injury and death insurance in Alaska must offer optional UIM coverage. An underinsured motor vehicle is defined by law according to insurance limits that are lower than the injuries for bodily injury or death that an accident victim has the right to recover from the vehicle's owner or operator. In other words, UIM insurance insures against the risk that a responsible motorist without or insufficient liability insurance cannot pay the insured's accident-related damages. An insurer's maximum UIM liability is "the lowest of" (1) the difference between the insured's damages caused by an underinsured motorist and the amounts paid to the insured "by or for a person who is or may be held legally liable for the damages" or (2) the UIM coverage limits.

FACTS AND PROCEDURES

The Insureds Allstate Coverage

Allstate issued separate car insurance to Nathan Harbor and Kenneth Mattison. The policy has identical provisions for medical payments and UIM coverage. The medical payment limit for each insured is $ 100,000 per person. The coverage contains a subrogation provision that if Allstate makes medical payments for an insured, the insured's right to recovery from someone else [Allstate’s] up to the amount [Allstate has] paid is stated.

The UIM "insurance contract" states that, excluding punitive damages, Allstate will "pay all damages" for bodily injury and property damage "that an insured person has the right to recover from the owner or operator of a… Underinsured car." that "the right to benefits and the amount to be paid will be decided in agreement between the insured and Allstate " (bold text in original). The insured were injured in independent car accidents, the other drivers were undoubtedly guilty. Allstate paid $ 21,784 in medical expenses to Harbor and $ 5,982.52 to Mattison under their medical protection. Allstate sent each insured notice that it intended to negotiate. the right to recovery with the responsible driver.Allstate later instructed the insured that they were not authorized to pursue their subrogated claims.

krade settled with the injured motorists about their respective liability insurance limits. Harbor received policy limits of $ 100,000 plus additional amounts available for advance interest, legal fees and costs totaling $ 121,407.96. Mattison received insurance limits of $ 100,000, but prejudice interest was not available under the driver's liability insurance. Mattison did not request legal fees and costs that are available under the liability policy.

Arbitration Judgments

The insured's claims could not be resolved and were submitted to arbitration proceedings under Allstate's UIM Arbitration Regulation. The arbitral tribunals, with two joint members, issued similar interrogation orders which expressly limited the arbitration proceedings to: (1) whether the insured was entitled to compensation from the driver in the event of a fault; (2) the size of such damages; and (3) the distribution of arbitration fees and costs.

Superior Court Proceedings. After the panels issued their final decisions, Allstate changed its complaints to seek relief from those decisions. The court finally upheld both final awards of summary judgment.

DISCUSSION

Panels exceeded their arbitration authority by settling issues that Allstate did not agree to resolve.

Arbitration clauses are contractual goods, and "a party may not be obliged to submit to arbitration all disputes which [the party] had not agreed to" present. Courts "shall decide whether… A controversy is the subject of an arbitration agreement." However, if interpretation of other contractual provisions is necessary to determine whether a claim falls within the arbitration clause of the contract, the arbitrators' interpretation of the contract is given due weight if the parties did not request prior notice of arbitration.

Harbor & # 39; power to determine the total amounts to be paid under the protection of the insured, even though their pre-arbitration injunctions expressly limited the scope of the arbitration proceedings to: (1) whether the insured was entitled to recover damages from the driver in the event of failure; (2) the amount of such damages; and (3) the allocation of arbitrary fees and costs, but Allstate did not agree to extend the arbitration ndigheten; on the contrary, it repeatedly and confirmed withheld consent. The panels therefore had no authority to determine the total benefit amounts to be paid under the insurance policies.

The arbitral tribunals therefore exceeded their authority by claiming that they would determine the total amount of benefits that Allstate owed the insured under their coverage; the panels had the power to determine only each insured's damage that occurs due to the driver's fault. Only a court, not an arbitral tribunal, may decide whether the insured is entitled to: prejudices about Allstate's liability to the insured. It was a legal mistake to confirm the panels' decision on their arbitration.

UIM insurers are not obliged to reimburse insured legal costs and costs for exhausting the driver insurance cover which is the basis for UIM's surplus. [19659010] The Supreme Court concluded that it was wrong to independently adopt the erroneous legal conclusions of the arbitrators that the insureds 'settlements with the debtors' insurers provided joint benefits that required Allstate to pay a proportionate share of the insured's legal fees. and costs incurred in obtaining the settlements

Insureds erroneously claim that they have secured a direct benefit to Allstate by settling with the liable parties because "Allstate seeks net 100% of this liability recovery against its UIM obligation to [the insureds]. "Securing the settlements thus did not create a common fund or otherwise give Allstate any direct benefit in addition to the subrogated medical payment claims.

CONCLUSION

As the arbitrators had no jurisdiction to decide anything beyond the insured's damages arising from their accidents and as Allstate withheld its consent to the panels to decide otherwise, we reverse the decisions and judgments of the Supreme Court. on certain aspects of the Court's separate analysis and d omar on legal issues that the panels wrongly decided. In view of (1) the arbitral tribunals' calculations of damages and (2) our clarification of the legal issues presented, we are required by the Supreme Court to determine the amount, if any, Allstate must pay each insured under its medical payments and UIM coverage. [19659003] Supreme Court rulings are reversed and remanded to the Supreme Court to determine what amounts, if any, Allstate owes the insured under their insurance policy in light of arbitration awards that determine the insured's damages caused by the faulty drivers.

Arbitration usually saves time and money for the parties whose disputes are resolved through arbitration. It works mostly because the arbitrators asked to resolve insurance issues limiting their results to what the arbitration provision of the police allows. In this case, the Supreme Court of Alaska found that the arbitrators exceeded their authority and issued an award that contained findings that only one court could provide.


© 2021 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service. as an insurance consultant who specializes in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurers and policyholders.

He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance and claims management attorney and more than 54 years in the insurance industry.

He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurance companies and their indemnity staff to become insurance professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the insurance claims library-https: //zalma.com/blog/insurance-claims- [19659036] library / Read posts from Barry Zalma at https://parler.com/profile / Zalma / posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/ podcast now available at https://podcasts.apple.com/us/podcast/zalma-on -insurance / id1509583809? uo = 4


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