Delaware Warns Insurers About Circumventing PIP Subrogation Claims

The Delaware Department of Insurance is reminding auto insurers that broad release language in settlement agreements which technically preclude a personal injury protection (PIP) carrier from pursuing its subrogation claim is unenforceable pursuant to the 21 Del. C. ยง 2118(g) and case law.

Delaware Insurance Commissioner Karen Weldin Stewart issued on Dec. 3 Domestic/Foreign Insurers Bulletin No. 82. The bulletin said Delaware courts have determined that the relevant statute grants a no-fault carrier a right of subrogation and does not circumscribe the common law right to subrogation notwithstanding the inclusion of broad release language in a settlement agreement.

The bulletin also noted that Delaware courts have further determined that “if a tortfeasor settles with an insured with notice or knowledge that a PIP carrier will be making payments for its insured, [a general release] is not a bar to the insurer’s right to subrogation.”

But despite this clear statutory and court-ordered mandate, the department said it has come to the regulators’ attention that auto insurers and adjusters in Delaware are disregarding both the statute and case law by including broad release language in settlement agreements in an attempt to circumvent PIP subrogation claims.

Such language can have the effect of driving up costs of litigation and, ultimately, insurance costs for consumers, regulators explained.

“If the department determines there exists a pattern or practice of insurers including such broad release language in their settlement agreements in an attempt to circumvent a PIP subrogation claim or failing to specifically state that such language does not release a PIP subrogation claim, the department will consider appropriate action against insurers to ensure future compliance,” the bulletin stated.