South Dakota Senate Bill 169 Seeks to Codify “Made Whole” in All Insurance Policies
South Dakota Senate seeks to graft “made whole” into each and every subrogation provision which insurers seek to enforce in the state. The legislature in South Dakota is attempting to amend Title 58-11 of the Insurance Code by adding the following new section:
No insurer under this chapter is entitled to participate in any recovery from any tortfeasor on account of bodily injury or death or damage to property unless and until its insured has first been made whole.
The insurers governed by the Insurance Code include Health, Worker’s Compensation, Auto or Property. While the bill does not eliminate subrogation, the statue simply requires the party be “made whole” but does not define what makes an individual “whole” in the eyes of the law.
This bill would keep carriers from pursuing, settling or recovering on a subrogation claim when their insured has any type of “out-of-pocket” claim such as an overage rental expense, deductibles or other expenses which remain unpaid. In the uninsured motorist arena, the subrogation attorney would not be able to represent the insured for a deductible or other loss as a conflict exists over their being “made whole” first.
The South Dakota legislature moves extremely fast and to prevent passage of this bill your quick and immediate action is needed. NASP urges its membership to review and address this bill as it appears it will affect numerous lines of business. Insurance subrogation professionals need to make sure their government affairs individuals are alerted to this bill and its truly broad impact on their subrogation rights. Local attorneys may want to make their voices heard to their state legislators as to the impact this will have on their subrogation
Remember, the NASP website, www.subrogation.org provides beneficial information on the form of legislative fact sheets that may be useful in your efforts to educate other about the harmful effects of this proposed bill.
February 15th, 2010 at 3:36 pm
Adam,
Subrogation in the underinsured motorist arena is virtually non-existent in South Dakota, since UIM carriers already get a credit against their coverage for the amount of liability insurance. I have practiced for 30 years and cannot recall a single instance when a UIM carrier sought subrogation from the individual tortfeasor; it is, as you probably know, typically not worthwhile.
Best wishes.
March 5th, 2010 at 5:02 pm
In response to Sen. Nancy Turbak Berry.
Your brief reply to such a bill definitely shows that your “30 years” of experience is very limited in scope. You only address auto insurance (specifically Uninsured Motorist coverage) and nothing else. Why?
This bill DOES NOT only apply to auto insurance. Take for example a property and casualty insurance, workers compensation. Workers compensation insurance companies use subrogation to recoup their costs in cases of machinery malfunction for example. What do you think this bill will do to workers compensation insurance companies or the employers they insure?
This bill is going to cost EVERYONE more money; other than those who are ultimately responsible.