Short answer: In Newman v. LM General Insurance Co., the Utah Court of Appeals held in 2026 that an auto insurer did not act in bad faith when it offered far less than its own policyholder demanded on an underinsured motorist (UIM) claim. The value of her pain and suffering was “fairly debatable,” and the insurer had investigated, evaluated and responded promptly. Under Utah law, a low offer on its own is not bad faith.
Many people assume that when their own insurer lowballs them, they have a bad faith case. This decision shows how high that bar is, and what an insurer can do to meet its duties even while disagreeing about value.
What Happened
The case is Newman v. LM General Insurance Co., 2026 UT App 94, decided June 19, 2026. Erica Newman was hit by another car in June 2019 and hurt her right knee. The at-fault driver had $25,000 in liability coverage, and Newman settled with that insurer for the full amount. She also received $10,000 in personal injury protection (PIP) benefits from her own insurer, LM, and her LM policy had $100,000 in UIM coverage.
In May 2020, through her lawyers, Newman made a UIM claim. She listed $16,766.74 in medical expenses, said her noneconomic damages exceeded the policy limit, demanded the full $100,000, and gave LM fourteen days to respond.
The adjuster responded within that window, asking for the amount of the liability settlement and for a missing medical record. Once he had the settlement figure, he offered $1,500 beyond what Newman had already received, suggested that her weight may have affected her knee, and said he was willing to keep talking. Three weeks later he asked whether she had a counteroffer. Newman instead rejected the offer and demanded arbitration. At her request, LM promptly paid the undisputed $1,500.
The arbitrator found $20,255.44 in past medical expenses and $41,000 in general damages. After credit for what Newman had already received, LM owed another $24,755.44, which it paid two weeks later. Newman then sued LM for bad faith. The trial court ruled for LM because she had not shown damages. The Court of Appeals affirmed on a different ground: the claim was fairly debatable.
The Rules the Court Applied
Utah’s leading case on an insurer’s duties to its own customer is Beck v. Farmers Insurance Exchange (1985). Every insurance contract carries an implied covenant of good faith, and at a minimum the insurer must diligently investigate the claim, fairly evaluate it, and act promptly and reasonably in rejecting or settling it. We describe Beck in more detail in what to do when an insurance claim is denied in Utah.
Later cases added the “fairly debatable” defense. Quoting a 1996 Utah Supreme Court decision, the court repeated that when a claim is fairly debatable, “the insurer is entitled to debate it and cannot be held to have breached the implied covenant if it chooses to do so.” The court also noted that Beck itself said damages are not available for the ordinary frustration and anxiety of filing a claim and negotiating with an insurer.
Why the Court Said the Offer Was Fairly Debatable
The offer was really $36,500, not $1,500. Newman had already collected $35,000, and she could not recover the same loss twice. Her medical bills were covered by what she had received, so the dispute was entirely about general damages, meaning pain, suffering and loss of enjoyment of life.
General damages have a wide reasonable range. The court surveyed Utah cases in which juries awarded as little as $1 in general damages and others in which they awarded hundreds of thousands. Because a UIM policy pays what the insured is “legally entitled to recover” from the at-fault driver (Utah Code 31A-22-305.3(2)(a)), the court said the same tort principles apply to valuing a UIM claim.
The arbitration result pointed the same way. The court noted, while saying it was not decisive, that the arbitrator’s $41,000 in general damages was closer to LM’s implied figure of about $19,700 than to the roughly $83,200 that Newman’s policy-limits demand implied. Newman also testified that the arbitration award was fair.
The insurer kept the process moving. The adjuster answered within the fourteen days, asked for what was missing, made an offer, invited a counteroffer, paid the undisputed amount, and paid the award promptly. The court contrasted Beck, where the insurer rejected the claim without explanation and then did nothing for a month. It also disagreed with the trial court’s description of the offer as a “nuisance offer” or a “de facto denial,” pointing out that it was Newman, not LM, who stopped negotiating.
What the Court Did Not Decide
The court did not reach Newman’s arguments that attorney fees from the UIM claim and the bad faith case could be recovered as consequential damages, or that a jury should decide whether she suffered emotional distress. Those questions remain open.
The decision also does not give insurers a free pass on low offers. The court said a case should still go to a jury if there are factual questions about whether the insurer diligently investigated or acted reasonably and promptly, and it noted that the Beck duties are a minimum, not a complete list. As of September 2026, we found no later appellate decision changing this ruling, though a Court of Appeals decision can be reviewed by the Utah Supreme Court.
What This Means for a Utah UIM Claim
- Your UIM claim is valued like a claim against the other driver. The evidence that proves pain and suffering in an injury case, from medical records to how the injury changed daily life, is what moves a UIM number too. See pain and suffering damages in Utah.
- UIM stacks on top of the other driver’s coverage. Under 31A-22-305.3(3)(k)(ii), UIM coverage may not be set off against the at-fault driver’s liability coverage; it is added to it. Our guide to underinsured motorist claims in Utah explains how.
- You choose arbitration or a lawsuit. The claimant may elect binding arbitration or litigation (31A-22-305.3(8)(a)). An arbitration award cannot exceed the UIM limits, and the arbitrator may not decide bad faith or consequential damages (31A-22-305.3(8)(l) and (8)(m)). That is why Newman’s bad faith claim had to be a separate lawsuit.
- Send complete records, and keep negotiating in writing. A missing record held up the first offer in this case, and the court weighed the fact that Newman did not counter.
- Bad faith needs more than a low number. The stronger facts are the ones Beck describes: no real investigation, a denial with no explanation, long silence, or refusing to pay what is not in dispute.
Talk to a Utah Car Accident Attorney
A UIM claim is a claim against your own insurer, and the way it is documented and negotiated shapes both what it is worth and whether any bad faith claim exists. We can review the policy, the offer and the file with you.
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