-The Defendant's liability insurer must first give notice to the UM/ UIM carrier, or its attorney, of its intent to settle with the Plaintiff for the limits of its underlying policy. In this notification, the Defendant's liability insurance carrier must provide verification of its coverage, and confirmation that the parties shall be released, and cooperative with the arbitration process.
-The Plaintiff, or Plaintiff's attorney, must then provide written notice to the UM/ UIM carrier of its acceptance of the offer tendered by the underlying liability insurer (Defendant's insurer) for its policy limits.
-Pursuant to strict statutory language, both of the aforesaid notices must be provided via certified mail, return receipt requested, or by another method whereby the notifying party acquires confirmation that its written verification has been received by the UM/ UIM carrier, or its attorney.
UM/ UIM Election
Upon the receipt of both of the aforementioned notices, the UM/ UIM carrier has thirty (30) days to elect between two (2) options, as follows:
(1) Agree to allow the Plaintiff to settle with the Defendant's liability insurer for the underlying policy limits. In making this agreement, the remainder of the Plaintiff's claim shall be pursued against the UM/ UIM carrier through a binding arbitration process. Further, the UM/ UIM carrier will waive its subrogation interests against the Defendant. Such Arbitration procedures are to be governed under the Tennessee Rules of Civil Procedure and Tennessee Rules of Evidence. (2) Decline to allow the Plaintiff to settle directly with the Defendant's liability insurer for the underlying policy limits, whereby rejecting the binding arbitration process and the waiver of its subrogation interests. As a result of this decision, the UM/ UIM carrier must pay the Plaintiff the amount of the Defendant's underlying liability coverage.
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