In Metropolitan Casualty Insurance Company v. Tepper, 34 FLW S111 (Jan. 30, 2009) the Florida Supreme Court resolved a direct conflict between the 5th DCA and the 2nd DCA concerning when an uninsured motorists carrier can begin a subrogation action against the at-fault driver/owner.
In general, under Florida Statute Section 627.727, if the insured intends to seek UM benefits, the insured must notify the UM carrier whenever the insured wishes to settle a case with the at-fault driver/owner. The UM carrier then has 30 days from receipt of the notice to either agree to the settlement, in which case the UM carrier waives its rights of subrogation against the at-fault driver/owner; or the UM carrier can pay the amount that the at-fault driver/owner is offering in settlement of the claim, in which case the UM carrier preserves its rights of subrogation against the at-fault driver/owner. (The UM carrier also waives its rights of subrogation if it fails to properly respond to the insured’s request within 30 days of receipt of the notice).
The question in Tepper, was when can the UM carrier initiate the subrogation action after paying its insured the amount which was being offered by the at-fault driver/owner.
The UM Statute says that “upon final resolution of the underinsured motorist claim, the underinsured motorists insurer is entitled to seek subrogation against the underinsured motorist and the liability insurer for the amounts paid to the injured party.” Fla. Stat. § 627.727(6)(b). The 2nd DCA held that this language allowed the UM carrier to file the subrogation action as soon as the UM carrier paid its insured the amount being offered by the underinsured motorist; while the 5th DCA held that this language required that the UM carrier wait until after its insured’s UM claim against it had been finally resolved before the UM carrier could initiate the subrogation action.
The Supreme Court affirmed the 5th DCA, holding that the final resolution of the entire UM claim was a “condition precedent to the UM carrier’s entitlement to bringing a subrogation action.” Recognizing that this holding could prejudice UM carriers when the underlying UM claim was not concluded before the 4 year tort statute of limitations had expired, the Supreme Court also held that the statute of limitations for the subrogation claim does not begin to run until the entire underlying UM claim has concluded.