State Farm loses Maryland UIM jurisdiction battle

Jane Brown ; 2025-11-24 08:06:08

State Farm's attempt to shift a modest UIM claim to circuit court just backfired in Maryland's highest court

Legal Insights

By Matthew Sellers

Nov 26, 2025Share

State Farm consented to settle. Then demanded circuit court. Maryland's high court said no – clarifying where UIM disputes belong.

When George Bowens' car was hit by an underinsured driver in February 2023, the path seemed clear: collect from the other driver's insurer, then pursue his own underinsured motorist coverage for the remaining damages. He didn't expect to end up at the Maryland Supreme Court.

On November 24, 2025, that court issued a decision affecting how insurers handle modest UIM claims in the state. The question was straightforward but consequential: when an injured driver settles with the at-fault motorist's carrier and then sues their own insurer for remaining benefits, does the case belong in District Court or circuit court?

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The answer depends on what the injured person is asking their own insurer for, not the total accident damages.

Bowens was injured in Prince George's County when Lisa Daniels struck his car. Daniels' liability insurer offered $30,000 – her full policy limit. Bowens' State Farm UIM policy provided $50,000. He stood to recover an additional $20,000.

Following Maryland's required procedure, Bowens notified State Farm of the settlement. State Farm consented and waived its subrogation rights – the legal mechanism allowing insurers to pursue claims against at-fault parties. Bowens accepted the $30,000 and then filed a claim with State Farm for the remaining $20,000.

State Farm denied it. Bowens sued in District Court, which has a $30,000 cap. State Farm moved to dismiss, arguing that Bowens needed to prove total damages of $50,000 to recover anything – exceeding District Court's jurisdictional limit. The case belonged in circuit court, the insurer claimed.

Both lower courts agreed and dismissed Bowens' claim. The Maryland Supreme Court reversed.

Justice Killough explained the principle simply: jurisdiction depends on the amount someone is suing for now, not their underlying injuries. Though Bowens' accident injuries totaled $50,000, he was only asking State Farm for $20,000 – the difference between his policy limit and what he'd already received. That fit squarely within District Court jurisdiction.

Critically, the court characterized Bowens' case as a contract dispute, not a tort lawsuit. He wasn't suing over the accident. He was claiming State Farm breached its insurance contract by refusing promised benefits. Contract claims are evaluated differently for jurisdictional purposes.

Maryland's insurance regulations specifically govern UIM claims. The state mandates uninsured and underinsured motorist coverage on every auto policy with minimums of $30,000 per person. The law includes a settlement procedure designed to help injured people receive money quickly without being trapped between competing insurers – a problem that plagued the system before these protections.

The statute allows injured persons to accept a liability insurer's settlement and pursue releases without prejudice to claims against their UIM insurer. Importantly, a UIM insurer's consent to a settlement doesn't limit its right to raise liability or damages issues in subsequent litigation, nor does it constitute an admission.

By consenting to Bowens' settlement, State Farm waived its subrogation rights and accepted procedural consequences. It couldn't demand circuit court proceedings while consenting to a modest settlement. The court also rejected State Farm's argument about lacking adequate discovery tools in District Court – simplified procedures were intentional, designed for faster, affordable justice.

The ruling sends a clear message: UIM insureds can pursue residual claims in District Court when remaining amounts fall below $30,000. For insurers, consenting to a tortfeasor's settlement carries a trade-off. They avoid litigation over liability but accept District Court jurisdiction for any remaining contractual disputes.