INSURED DID NOT VIOLATE THE SUM POLICY BY SETTLING WITH THE OTHER DRIVER WITHOUT THE SUM CARRIER’S CONSENT, THE SUM CARRIER WAS INFORMED OF THE SETTLEMENT AND TOOK NO ACTION WITHIN 30 DAYS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the supplementary uninsured/underinsured motorist (SUM) carrier (petitioners) was not entitled to permanently stay arbitration on the ground that the injured party (appellant) had settled with other driver’s carrier without the SUM carrier’s consent. In fact the SUM carrier had notice of the settlement and took no action within 30 days. Therefore the settlement did not violate the SUM carrier’s policy:

… [T]he provisions of language set forth in Insurance Regulation 35-D (see 11 NYCRR 60-2.3), which must be included in all motor vehicle liability insurance policies in which SUM coverage has been purchased, require, inter alia, that where an insured advises the insurer of an offer to settle for the full amount of the tortfeasor’s policy, the insurer must either consent to the settlement or advance the settlement amount to the insured and assume the prosecution of the tort action within 30 days … . Where the insurer does not timely respond in accordance with such condition, the insured may settle with the tortfeasor without the insurer’s consent and without forfeiting his or her rights to SUM benefits … .

… The petitioners’ submissions demonstrated that the appellant executed a release … “after thirty calendar days actual written notice” to the petitioners, as provided for in Condition 10, which is required by Insurance Regulation 35-D to be part of the SUM endorsement. Consequently, the petitioners failed to establish that the appellant settled … in violation of a condition of the policy requiring the petitioners’ consent to settle. Unitrin Direct Ins. Co. v Muriqi, 2019 NY Slip Op 04178, Second Dept 5-29-19