In a recent decision, the Oregon Court of Appeals determined a UIM claimant's comparative fault is central to the issue of liability and therefore a defendant can raise the issues and remain under the protection of the safe harbor.[1]

Under ORS 742.061 an insured can recover attorney fees in an action brought against their own insurer for certain benefits, including coverage in an uninsured/underinsured motorist situation. However, the statute contains two safe harbor provisions, which if complied with, insulates the insurer from attorney fee exposure. One of these safe harbor rules applied to UIM benefits. This rule requires the insurer to accept coverage and agree to resolve the dispute through binding arbitration limiting the issues to be raised to the liability of the uninsured motorist and damages only.

 In Berger v. Safeco Ins. Co., Plaintiff was involved in a motor vehicle accident with an underinsured motorist, he submitted his claim to Safeco, his insurer. Safeco then sent a letter agreeing to arbitration limited to the liability of the other driver and the damages due to Plaintiff, which constituted a valid safe harbor letter under ORS 742.061. Plaintiff opted to file suit rather than arbitrate. At the trial, Safeco disputed Plaintiff's comparative fault, but Plaintiff won and was awarded attorney fees. 

 Safeco argued the award of attorney fees was incorrect, asserting that its letter properly invoked the safe harbor rule's protections and none of its arguments during the litigation had gone beyond the scope of permissible issues. The trial court held Safeco left the safe harbor when it raised the issue of Plaintiff's comparative fault. 

 Safeco then appealed the decision and took the position that arguments as to comparative fault fell within “the liability of the underinsured motorist,” thereby protecting it from attorney fee exposure. Plaintiff argued that Safeco could not litigate the issue of its own insured's fault because the statute only allows an insurer to litigate the fault of the underinsured motorist.

ORS 742.061(3) permits a defendant to contest “the liability of the uninsured/underinsured motorist.” Based on this language, the Court of Appeals held Plaintiff's comparative fault is an issue within the overarching issue of the underinsured motorist's liability. The Court found in an accident between an uninsured/underinsured driver and a plaintiff, an argument that the plaintiff is partially at fault for the collision necessarily is an argument about the extent of the uninsured/underinsured driver's obligation. Therefore, raising these issues does not bar a defendant from protection from an attorney fee award under the safe harbor rules. 

[1] Berger v. Safeco Ins. Co., 305 Or App 380, 470 P3d 420 (2020).