Compliance With State Law Not Enough to Salvage Illusory UIM Policy

The Supreme Court of Idaho reversed an appellate court’s grant of summary judgment in favor of an insurer after finding the insurer’s policy provided illusory UIM coverage. The case is Pena v. Viking Ins. Co., 503 P.3d 201 (Ida. 2022).

Erick Pena’s auto policy with Viking had UIM limits of $25,000 per person and $50,000 per accident as well as a $5,000 limit for medical care. Pena was injured in an auto accident in 2016, for which the other driver’s insurer paid its $25,000 policy limit; Viking paid the limit for medical care. Pena subsequently filed a UIM claim. The Viking policy defined an underinsured motor vehicle as “[a] motor vehicle to which a bodily injury liability bond or policy applies at the time of the car accident providing bodily injury liability limits less than the limit of liability for this coverage.” (emphasis original). Viking denied Pena’s claim, saying the other driver’s car was not an “underinsured motor vehicle” because the other driver’s liability limit was not less than Pena’s limit.