Appellate Decisions to Know When Defending UIM Claims in Washington

Author: Nathan Furman

March 4, 2019 9:00am

In Finney v. Farmers Insurance Co., 21 Wn. App. 601, 586 P.2d 519 (1978), aff’d, 92 Wn.2d 748 (1979), Division Three of the Washington State Court of Appeals held that a UIM insurer is bound by the findings and judgment from the insured’s lawsuit against the tortfeasor (i.e., the underinsured motorist) if the insurer is kept apprised of the suit but fails to intervene.

In Girtz v. New Hampshire Insurance, 65 Wn. App. 419, 828 P.2d 90 (1992), the insureds sued the tortfeasor and received (i.e., obtained and collected) a judgment for less than the insurance policy’s UIM limits. The insureds then brought a UIM claim, arguing the judgment did not provide full compensation for their injuries. Division Three of the Court of Appeals held that the insureds were collaterally estopped from arguing their damages exceeded the verdict against the tortfeasor. Consequently, the insureds could not pursue a UIM claim.

In Fisher v. Allstate Ins. Co., 136 Wn.2d 240, 961 P.2d 350 (1998), the Washington Supreme Court affirmed Finney and held that a UIM insurer is bound by “the findings, conclusions and judgment” entered in an underlying action (trial/arbitration) when the UIM insurer knows of the underlying suit but fails to intervene. Notice is adequate when the insured advises the insurer of his or her lawsuit against the tortfeasor.

In Lenzi v. Redland Insurance Company, 140 Wn.2d 267, 996 P.2d 603 (2000), the insured obtained a default judgment against the tortfeasor. The UIM insurer knew of the underlying lawsuit but chose not to intervene and did not seek to set aside the default judgment. The Washington State Supreme Court held that the UIM insurer was bound by the default judgment based on claim preclusion and, therefore, could not re-litigate or arbitrate the damages awards.

In Petersen-Gonzales v. Garcia, 120 Wn. App. 624, 86 P.3d 210 (2004), the UIM insured sued the tortfeasor and then amended her lawsuit to add her UIM insurer as a defendant. The insurer appeared and participated in all aspects of the case. The insured prevailed at trial, but was unhappy with the amount of the verdict and moved for a new trial based on the insurer’s participation. Division Three held that the right-to-defend language in the insurer’s policy included a right to participate at trial. The court held also that the insurer’s participation at trial did not violate the duty of good faith and that the collateral source rule did not prohibit the insurer’s participation.

In Little v. King, 160 Wn.2d 696, 161 P.3d 345 (2007), the insured sent her UIM insurer a copy of her lawsuit against the tortfeasor. The insurer did not intervene. The insured obtained a default judgment against the tortfeasor for more than $2 million. The Washington State Supreme Court, adhered to its earlier decision in Lenzi, and held that the insurer was bound by the default judgment. The court found that the insurer had never appeared or intervened and, therefore, was not entitled to notice of any hearing. Rather, the insurer knew of the insured’s lawsuit against the tortfeasor but chose not to intervene. Little highlights the danger for a UIM insurer that elects not to intervene in the insured’s lawsuit against the tortfeasor.

In Mathioudakis v. Fleming, 140 Wn. App. 247, 262 P.3d 451 (2007), Division Two of the Court of Appeals held that in a lawsuit between the UIM insured and the tortfeasor, the tortfeasor is not bound by the award from an earlier UIM arbitration between the insured and the UIM insurer. The court reasoned that the tortfeasor had no standing to intervene in the arbitration and, therefore, could not be bound by the arbitration award.


After receiving notice of the UIM insured’s lawsuit against the tortfeasor, it is often in the UIM insurer’s best interest to intervene. Failing to do so can leave the insurer bound by the insured’s verdict against the torfeasor.

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