Strategies, Challenges, and Answers

When Is A UM/UIM Provider Bound By A Judgment Against The Tortfeasor?

Lucky for John Pietrosh, his parents bought UM/UIM coverage as part of their Allstate auto insurance policy.  Not so lucky for John, one day in July 1966, he was riding his bike when an uninsured driver hit and injured him.

His parents reported the accident to their Allstate agent.  The agent responded that the family was “fully covered” and that it would “take care of the whole thing”.

The Pietrosh family sued the uninsured driver and sent notice of the suit to Allstate.  Allstate did not intervene.  The uninsured driver appeared and defended.

The court convened the trial in January 1967.  The jury awarded Plaintiff a judgment of $21,677.50.  Plaintiff then presented the judgment to Allstate for payment. 

When Allstate did not pay, the Pietrosh family filed suit.  The case is reported at Allstate Ins. Co. v. Pietrosh, 85 Nev. 310; 454 P.2d 106; 1969 Nev. LEXIS 361 (1969).

Allstate argued that it should not have to pay the judgment because the dispute should have been arbitrated pursuant to the Arbitration clause in the policy.  The court rejected that argument because the company had not asked for an arbitration.  Since the date of this decision, the Nevada Legislature has prohibited an insurance company from compelling an insured to arbitrate.  See HERE.

Allstate also argued that one of its policy provisions required that the Pietrosh family had to get the insurance company’s permission before it could bring the suit.  The court acknowledges that the suit provision makes sense when an insurance company is not notified of the litigation.

But the court refused to enforce that provision where the insurance company was aware of the litigation brought by its insured and simply sat back on its haunches doing nothing.  The court took such an action because insurance policies are a unique type of contract.  They are complex.  Insurance companies prepare the policies without input from the insured.  Insurance companies are the experts.  Insureds, not so much.

The court said that if the insurance company had notice of a claim, it has the duty to investigate expeditiously, seek settlement when it can and either consent to suit or seek to intervene when the insured has sued the tortfeasor.  The court said that the company should try to reduce multiple suits.  The court explained the company could not ignore its insured and seek refuge in the fine print of the policy.

Ultimately, the court explained that where the company is given notice of its insured’s action against the tortfeasor and fails to intervene, the company will be bound by any judgment entered in the underlying action.  That is true even if there are policy provisions to the contrary.

If you have questions about intervention in Nevada, please contact Mike Mills at Bauman, Loewe, Witt and Maxwell by phone at 702-240-6060 or by email at

About Michael Mills

Mr. Mills practices in the area of civil litigation and appeals, with particular experience in matters involving trucking liability, insurance defense, insurance coverage, premises liability, products liability and defense of personal injury. Mr. Mills is a member of the Trucking Insurance Defense Association, the Defense Research Institute Trucking Committee and the Nevada Motor Transport Association. Mr. Mills is licensed to practice before the Nevada Supreme Court and the Utah Supreme Court. He is also licensed to appear before the United States Supreme Court, the U.S. District Courts for the Districts of Nevada and Utah, as well as the U.S. Court of Appeals for the Ninth Circuit. Mr. Mills has created 3 Blogs for the benefit of the insurance industry. He serves as editor and publisher of the Nevada Insurance Law Blog, the Nevada Coverage and Bad Faith Blog and the Nevada Trucking Law Blog.

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