Tubbs v. Farmers Insurance Exchange, 2015 COA 70

Tubbs was injured in a California car accident; the other driver was liable and had a $100,000 liability policy.
Tubbs's Farmers policy included $500,000 uninsured/underinsured motorist (UIM) coverage with an exhaustion clause requiring that the tortfeasor’s liability limits be actually exhausted by payment of settlements or judgments before UIM pays.
Tubbs accepted a $30,000 settlement from the tortfeasor and then sought UIM benefits from Farmers for damages he alleges exceed $100,000.
Farmers denied UIM benefits based on the exhaustion clause; the district court granted Farmers summary judgment relying on Jordan v. Safeco.
On appeal, Tubbs argued the exhaustion clause is void under Colorado’s UIM statute, section 10-4-609(1)(c); the court addressed preservation and reviewed de novo.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an insurer may require actual exhaustion of the tortfeasor’s liability policy before UIM coverage is triggered	Tubbs: the statute mandates UIM cover the difference between damages and tortfeasor’s liability limit regardless of what the insured actually recovers; an actual-exhaustion condition is void	Farmers: exhaustion clause is enforceable (Jordan); insured must collect the tortfeasor’s policy limit before UIM pays	Court: actual-exhaustion clause is void and unenforceable because §10-4-609(1)(c)’s plain language requires UIM to cover damages in excess of the tortfeasor’s limit regardless of recovery

Jordan v. Safeco Ins. Co. of Am., 348 P.3d 443 (Colo. App. 2013) (court addressed relation of damages to tortfeasor’s limit but did not decide enforceability of actual-exhaustion clauses)
Farmers Ins. Exch. v. Anderson, 260 P.3d 68 (Colo. App. 2011) (policy provisions that dilute or condition statutorily mandated UIM coverage may be void as against public policy)
Young v. Brighton Sch. Dist. 27J, 325 P.3d 571 (Colo. 2014) (courts must give effect to plain statutory language to ascertain legislative intent)