In August, 2006, the Hawaii Supreme Court addressed what an uninsured motorist (UIM) insurer must do when its insured wants to compromise an underlying bodily injury (BI) liability claim and still pursue a UIM claim. In Granger v. GEICO, S.C. No. 25457, the wrongdoer and its insurer offered $90,000 out of the $100,000 liability policy on the underlying BI claim. Granger notified her UIM carrier, GEICO, that she wanted to settle and requested its consent to the settlement. GEICO declined, so Granger asked GEICO to pay the $90,000 to her and take over the underlying BI claims. GEICO declined to do that also. The Hawaii Supreme Court held that in this situation that a UIM insurer may refuse to consent to a BI settlement in order to preserve its subrogation claims against the wrongdoer, but in order to do so, the UIM insurer must pay to its insured the proposed settlement amount on the underlying BI claims - substituting itself into its insured's position on those claims. The court noted that otherwise GEICO could force its insured to work to pursue GEICO's interests at considerable cost and expense to the insured.
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