Today the Oregon Supreme Court held that a policyholder is not entitled to attorney fees under Oregon's fee-recovery statute for insurance coverage disputes (ORS 742.061) until the insured has given the insurance company information that at least suggests that coverage is requested under the policy The case is Zimmerman v. Allstate. The facts, briefly: Zimmerman was injured in an accident with a motorist who it turns out was underinsured (UIM), but she didn't seek UIM coverage from Allstate from the outset of her claim, because she didn't know the extend of her injuries and didn't know what the policy limits of the other motorist were. So at the outset she only made a claim for personal injury (PIP) benefits under her Allstate policy. Later, after retaining a lawyer, discovering that her injuries exceeded her PIP benefit, and discovery that the other motorist only had the minimum in coverage, she made a demand for UIM benefits. Allstate paid, and she then sought her attorney fees all the way back to the time that she submitted her first claim.
Oregon's attorney fee statute allows recovery of attorney fees if the carrier does not settle the claim within six months of "proof of loss." (For UIM claims, a carrier may avoid fee exposure by doing other things as well, but that is specific to UIM claims). The Oregon courts have interpreted the phrase "proof of loss" very broadly, to encompass virtually any kind of notice provided by the insured about the loss. However, in this case the Court did not award fees all the way back to the initial notice, because auto coverage comes in two parts (reduced to its essence): PIP coverage, and UIM coverage. The Court reasoned that because the trigger of coverage between the two forms of benefit are so different, and the initial notice provided by Zimmerman did not contain information directed at the UIM trigger of coverage, attorney fees would only apply based on the timing of the notice from Zimmerman that UIM coverage was being sought.
The Court went to great lengths to emphasize that the general law applicable to "proof of loss" was not changed by the decision, which was driven by the type of coverage involved. It is, however, a reminder that policyholder counsel should inform carriers as soon as possible of every type of coverage claim that may potentially be implicated by a loss.
