Farm Bureau Insurance Company v Kennell; (COA-UNP, 8/16/2002, RB #2327)


Michigan Court of Appeals; Docket #232071; Unpublished
Judges White, Neff and Jansen; unanimous; per curiam
Official Michigan Reporter Citation: Not Applicable, Link to Opinion courthouse graphic

Not applicable

Underinsured Motorist Coverage: Arbitration of Underinsured Motorist Claims

In this unanimous unpublished per curiam opinion, the Court of Appeals upheld the award of interest on an arbitration award for underinsured motorist benefits.

Mark Kennell sustained serious injuries when struck by a vehicle. His family carried an automobile insurance policy issued by Farm Bureau which provided underinsured motorist benefits. The lawsuit against the driver who caused the accident was settled for the driver’s policy limit of $100,000. The parties agreed to arbitrate the remaining claim for underinsured motorist benefits, and the arbitration panel ultimately issued an award in favor of Kennell in the amount of $189,350, which the panel indicated included an award of interest in the amount of $55,600 from the date of the accident to the date of the arbitration award (pre-award interest).

Farm Bureau contested its obligation to pay pre-award interest, claiming that the arbitration panel exceeded its authority and erred as a matter of law by awarding such interest. The insurance company acknowledged that it was obligated to pay “post-award interest” as mandated by statute, MCL 438.7 and MCL 600.6013(5).

In upholding pre-award interest, the Court of Appeals held as follows:

Absent a provision precluding the award of interest, an arbitrator does not exceed his authority by including interest as an element of damages. . . . An arbitrator’s authority encompasses the authority to grant pre-award interest.”

The court held in this case that neither the insurance contract nor the arbitration agreement precluded the arbitration panel from deciding the issue of interest. The court cited in support of its rulings, the Supreme Court decisions of Holloway Construction Company v Oakland County Board of County Road Commissioners, 450 Mich 608; 543 NW2d 923 (1996) and Wiselogle v Michigan Mutual Insurance Company, 453 Mich 978; 557 NW2d 316 (1996).