Originally from Dispute Resolution Journal

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INSURER'S WAIVER OF ARBITRATION RIGHT — UNINSURED MOTORIST COVERAGE — FAILURE TO INTERVENE IN ACTION — SETTLEMENT WITH MOTORIST — CORRESPONDENCE BETWEEN INSURER AND INSURED

The fact that insurer did not intervene in insured's action against the uninsured motorist, either on its own behalf or for the motorist, did not constitute a waiver of insurer's right to arbitrate the issue of the motorist's liability. Furthermore, there was no waiver as a result of the insurer's settlement of the motorist's claim for damages made pursuant to its determination that the accident resulted from insured's negligence. Nor was correspondence between insurer and insured, in which insured made no request for arbitration and insurer did not deny its contractual liability, a waiver. The court stated insurer had no right to intervene on behalf of the motorist because it had no contractual relationship with him, and thus could not represent him without his consent. Insurer could not intervene on its own behalf because it was not a party in interest. This resulted from the fact that insured's prosecution to judgment of its claim against the motorist, without obtaining insurer's consent as was required by the policy, relieved insurer of liability under the policy's exclusionary provision, a provision found to be legal by the court.

Riley v. State Farm Mut. Auto. Ins. Co., 420 F.2d 1372 (6th Cir. 1970).