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On March 18, 2007, Ember Buckley was a passenger in a vehicle operated by her then boyfriend, Harvey Betts.  The vehicle was involved in a single vehicle accident.  Ms. Buckley was injured and incurred medical bills exceeding $200,000.  Mr. Betts’ liability insurance carrier, GEICO, offered to settle Ms. Buckley’s claim against Mr. Betts for the $100,000 liability policy limits.  Since the GEICO policy limits were not enough to cover her medical bills, Ms. Buckley made a claim for uninsured/underinsured (“UM”) motorist coverage against her own insurer, The Brethren Mutual Insurance Company.  Brethren’s UM policy had limits of $300,000, which afford Ms. Buckley underinsured motorist coverage in an amount up to $200,000 in excess of GEICO’s $100,000 offer.  Ms. Buckley notified Brethren of GEICO’s policy limits offer by sending a letter via certified mail pursuant to Maryland Insurance Code §19-511.

Under §19-511, once a UM insurer is notified by a claimant of the offer of liability limits, it has sixty days to send to the claimant: (1) written consent to accept the liability insurer’s settlement offer, collect the liability policy limits, and execute releases; or (2) written refusal to consent to the acceptance of the settlement offer.  If the UM insurer fails to respond within sixty days, its silence is deemed to be a consent to claimant’s acceptance of the liability insurer’s offer.  If a UM insurer refuses to consent, then it must pay to the claimant the full amount of the settlement offer and it will retain its right to subrogate against the tortfeasor.

In response to the certified letter sent by Ms. Buckley, Brethren mailed a letter to Ms. Buckley advising her that it would waive subrogation against Mr. Betts.  Ms. Buckley then executed a general release, which released Mr. Betts and “all other persons, firms or corporations” from “any and every claim…resulting or to result” from the accident.  Thereafter, Brethren denied coverage claiming that Ms. Buckley waived all of her claims, including her UM claim when she executed the release.

The Maryland Court of Appeals issued an opinion on March 4, 2014, holding that Ms. Buckley’s release did not release her UM claim.  The Court reinforced established law that “parties are privileged to make their own agreement and thus designate the extent of the peace being purchased.”  The Court stated, however, that this privilege is not unfettered, and may be limited by “constitutional, statutory or clear important policy barriers.”  One such statutory barrier is §19-511.  Here, given that Ms. Buckley referenced §19-511 in her letter to Brethren and complied with the procedures set forth therein, the Court found that the release was executed pursuant to the statute.  The Court concluded that Brethren, as an insurance company, was therefore charged with knowledge of the statute and its procedures.

The Court’s opinion should not be read to hold that every general release executed by a claimant preserves an uninsured motorist claim.  Rather, the opinion should serve as a reminder of the importance of following the procedures set forth in §19-511, because a failure to follow these procedures can result in the unintentional release of all claims, including UM claims.

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