Utah Supreme Court Advances Policyholder Rights

Utah's highest court rejects an insurance company's attempt to use the equitable doctrines of unjust enrichment and restitution to recoup an above-limits settlement payment made by the insurer in settlement of an underlying claim, holding that recoupment is only available if explicitly provided for in the insurance contract.

Weighing in on an issue that has split courts, the Utah Supreme Court recently held that a liability insurer that funds a settlement of an underlying claim against its policyholder for more than policy limits cannot later seek reimbursement of amounts paid in excess of policy limits under the "equitable principles" of unjust enrichment or restitution. Instead, the court held that recoupment is available only when the right is expressly provided in the insurance policy. U.S. Fid. & Guar. Co. v. U.S. Sports Specialty Ass'n, No. 20090657 (Utah Jan. 24, 2012) (USF&G). This decision underscores the need for policyholders to exercise caution