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Schroeder v Farmers Insurance Exchange; (COA-PUB, 10/22/1987; RB #1101)


Michigan Court of Appeals; Docket 92839; Published  
Judges Gribbs, Holbrook, and Lambros; Unanimous; Per Curiam  
Official Michigan Reporter Citation: 165 Mich App 506; Link to Opinion alt    

Not Applicable

Private Contract (Meaning and Intent)
Underinsured Motorist Coverage: Underinsured Motorist Coverage in General
Underinsured Motorist Coverage: Setoffs Applicable to Underinsured Motorist Cases
Underinsured Motorist Coverage: Arbitration of Underinsured Motorist Claims    

In this unanimous per curiam Opinion, the Court of Appeals affirmed a circuit court order confirming an arbitration award on a claim for underinsurance motorist’s benefits. The arbitration resulted in the determination that the liability of defendant, plaintiff’s own insurance carrier, was subject to a set-off for residual liability benefits paid from the insurance of the other party.

The applicable language of the plaintiff’s underinsurance endorsement provides that the amount of bodily injury coverage shall be reduced by the amount of any other bodily injury coverage available to any party held to be liable for the occurrence. Plaintiff received $20,000 of residual liability coverage from the other party, and made claim for the full $30,000 of underinsurance available under his own policy. Defendant asserted a set-off of $20,000 in accordance with the language of its endorsement. Plaintiff argued that the reduction for the $20,000 received from the liability insurer of the tortfeasor should be applied to his "aggregate damages for which the third party is liable," and not to the policy limits of plaintiff s underinsurance coverage.

The Court of Appeals found this argument to be a strained reading of the terms of the endorsement, which deducts the set-off directly from the amount of coverage provided under the policy. The court distinguished the holding in Michigan Mutual Liability v Karsten, 13 Mich App 46 (1968) Iv den, 381 Mich 792 (1968), where the set-off applied to "any amount payable" under the uninsured motorist provision, which the court in that case construed as the total amount of damages sustained by the plaintiff.

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