author: ZINTER, Justice.

text:
    2005 SD 89
    STATE AUTO INSURANCE COMPANIES, Plaintiff and Appellant, v. B.N.C. a/k/a B.D., Defendant, and Audrey Ault, f/k/a Audrey Duggan, Defendant and Appellee.
    No. 23447.
    Supreme Court of South Dakota.
    Argued on April 27, 2005.
    Decided July 27, 2005.

      Mitchell Peterson of Davenport, Evans, Hurwitz & Smith, LLP, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.
    Mark J. Arndt of May & Johnson, Sioux Falls, South Dakota, Attorneys for defendant and appellee.
   ZINTER, Justice.

[¶ 1.] State Auto insured a vehicle that, while being operated by an unauthorized driver, was involved in a single car accident rendering it a total loss. After paying its insured/owner for the property loss, State Auto brought this subrogation claim against the mother of the minor who was driving the vehicle. State Auto claimed that the mother was responsible on a theory of vicarious liability and on three theories of direct negligence. The trial court rejected all claims and granted summary judgment in favor of mother. We affirm the dismissal of all claims except one asserting direct negligence. Because material issues of disputed fact exist on the claim asserting negligence in the performance of a gratuitous undertaking, we reverse and remand on that issue.

Facts and Procedural History

[¶ 2.] State Auto insured a Chevrolet Suburban owned by William Close. Close is the grandfather of the driver, B.D., and the father of B.D.’s mother, Audrey Ault. Ault is B.D.’s custodial parent. B.D. was 14 years-old at the time she was driving Close’s car and had the accident.

[¶ 3.] The events leading up to this incident began when Ault stopped by Close’s home to water his plants, let the cat in, and check the home while he was out of town on vacation. Ault entered the home using the key. Later that day, without Ault’s knowledge, B.D. and a friend went to Close’s home to go swimming in the back yard (Close’s home was apparently on a lake.) Sometime after arriving, B.D. also entered the home. State Auto alleges that B.D. entered the home through the back patio door that Ault had mistakenly left unlocked on her earlier visit. Although there is some dispute about the actual method of entry, we accept State Auto’s version of the facts and assume that B.D. entered her grandfather’s home through the door Ault had mistakenly left unlocked.

[¶ 4.] Sometime after entering the home, B.D. decided to go “to town” to pick up another friend to go swimming. Close’s suburban was in the garage and B.D. knew that her grandparents kept the keys in the vehicle. Although she had no driver’s license and did not have permission to drive the car, B.D. took the vehicle without incident. However, while returning to Close’s home, B.D. lost control of the vehicle on a gravel road and it rolled. The suburban was a total loss.

[¶ 5.] State Auto paid Close $30,708 for the property damage to the vehicle. State Auto then brought this subrogation action against Ault and B.D. to recover the insurance benefits it had paid. The trial court granted summary judgment in favor of Ault on all theories. It concluded that Ault was not vicariously liable for her daughter. It also concluded that State Auto’s three direct negligence claims were barred because Ault owed no duty to Close. State Auto appeals, questioning:

(1) Whether Ault was vicariously liable for the damages caused by her daughter under the parental liability statute, SDCL 25-5-15.

On its direct negligence claims, State Auto questions;

(2) Whether Ault had a duty to keep Close’s home secured;
(3) Whether Ault had a duty to not encourage her daughter to drive; and,
(4) Whether Ault had a duty to better supervise her daughter.

Decision

[¶ 6.] Summary judgment is permitted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” SDCL 15 — 6—56(c). We view the evidence most favorably to the nonmoving party and resolve all reasonable doubts against the moving party. Thornton v. City of Rapid City, 2005 SD 15, ¶ 4, 692 N.W.2d 525, 528. However:

[w]hen a motion for summary judgment is made and supported as provided in § 15-6-56, an adverse party may not rest upon the mere allegations or denials of his pleading, but [its] response, by affidavits or as otherwise provided in § 15-6-56, must set forth specific facts showing that there is a genuine issue for trial. If [the adverse party] does not so respond, summary judgment, if appropriate, shall be entered....

SDCL 15-6-56(e). Because Ault’s motion was properly supported, State Auto, as the adverse party, must have designated specific facts that revealed a genuine issue for trial. U.S. Bank Nat’l Ass’n v. Scott, 2003 SD 149, ¶ 39, 673 N.W.2d 646, 657. “[M]ere general allegations and denials which [did] not set forth specific facts will not prevent the issuance of a judgment.” Casazza v. State, 2000 SD 120, ¶ 16, 616 N.W.2d 872, 876 (citations omitted).

Vicarious Liability

[¶ 7.] State Auto contends that Ault is vicariously liable for the damages caused by her daughter. Generally, parents are not vicariously liable for the acts of their children. SDCL 25-5-14. However, SDCL 25-5-15 provides a limited exception for malicious and willful acts:

Any person, firm, association, private or public corporation, including the State of South Dakota and its political subdivisions, suffering damages to real, personal, or mixed property, or personal injury, through the malicious and willful act or acts of a minor child or children under the age of eighteen years while residing with their parents, shall have therefor a cause of action against and recover of the parents of such child or children. In each case the amount of recovery against one or both of the parents shall be limited to actual damages of fifteen hundred dollars and the taxable court costs, and does not apply to damages proximately caused through the operation of a motor vehicle by the minor child or children. If the issue is disputed, any determination that a parent is not responsible for the full amount of actual damages and costs authorized by this section shall be justified in a specific finding, in writing or on the record.

(Emphasis added). This case presents two issues under this statute: (1) whether the property damage was suffered “through the malicious and willful acts” of B.D. and (2) whether the second modifying clause in the second sentence of SDCL 25-5-15 (emphasized above) eliminates vicarious liability for a child’s operation of a motor vehicle.

(1) Willful and Malicious Acts

[¶ 8.] State Auto argues that SDCL 25-5-15 “imposes strict liability upon parents when the requirements of the statute ... are met.” State Auto asserts that the statutory requirements were met because it “suffered damages through the ‘malicious and willful’ acts of B.D.” in taking the vehicle. Ault disagrees by focusing on B.D.’s operation of the vehicle. Ault contends that B.D. was merely negligent in causing the accident. Ault argues that because ordinary negligence was the proximate cause of the accident, the malicious and willful element of the vicarious liability statute is absent.

[¶ 9.] There is no dispute that State Auto must establish that the damages were suffered through a malicious and willful act. This statutory requirement is one of causation. It requires that the person seeking recovery establish that the damages were proximately caused by a malicious and willful act of a child.

[¶ 10.] The term malicious is generally defined as an act that is “[substantially certain to cause injury[;] ... [without just cause or excuse.” Black’s Law Dictionary (8th ed 2004). We have defined malicious as “having, or done with, wicked, evil or mischievous intentions or motives; wrongful and done intentionally without just cause or excuse or as a result of ill will.” State v. McGill, 536 N.W.2d 89, 94 (S.D.1995) (citation omitted). Willful conduct involves a lower level of mens rea generally defined as an act that is “[voluntary and intentional, but not necessarily malicious.” Black’s Law Dictionary (8th ed 2004).

[¶ 11.] Recognizing that loss of control of the vehicle was not malicious and willful, State Auto focuses on B.D.’s taking of the vehicle. State Auto alleges that the taking was “willful” in that her state of mind “was more than merely negligent.” However, we need not consider this argument because even if the taking of the vehicle was a willful act, the statute requires more than mere willfulness. SDCL 25-5-15 requires that the child’s act be “malicious and willful.” But here, State Auto has not identified any fact in the summary judgment record suggesting that B.D. took her grandfather’s vehicle maliciously.

[¶ 12.] It is important to note that the factual record for this summary judgment consisted of statements of material facts submitted by both parties. These statements reflect that B.D., while at her grandparent’s home to swim, entered the house and took the suburban. With respect to B.D.’s mens rea in taking the vehicle, State Auto’s statement of material facts reflects only that “[wjhile in the Close’s home, B.D. decided that she needed to drive into town to pick up a friend to go swimming.” The statements also reflect that thereafter, while driving, B.D. encountered loose gravel on the road, was unable to control the vehicle, and rolled it a number of times. Although these statements do not reflect that B.D. had permission to take or operate the vehicle, there is no fact suggesting that any part of B.D.’s conduct at her grandfather’s home was malicious. Rather, the evidence merely indicates that, while on her grandfather’s premises to swim, B.D. took his vehicle without permission to pick up a friend and, thereafter, negligently lost control of the vehicle.

[¶ 13.] We reiterate that State Auto was obligated to identify “specific facts showing that there is a genuine issue for trial.” See U.S. Bank, 2003 SD 149, ¶ 39, 673 N.W.2d at 657 (citations omitted). However, the statements of material fact do not identify anything from which the trial court could have found or inferred that the taking of B.D.’s grandfather’s vehicle was malicious; i.e. “[substantially certain to cause injury [without just cause or excuse ... [;] ... having, or done with, wicked, evil or mischievous intentions or motives; [or] wrongful and done intentionally without just cause or excuse or as a result of ill will.” See supra ¶ 10. Therefore, even assuming that the taking of the vehicle was willful, State Auto has not met its burden of identifying any fact suggesting that the damages were suffered through malice.

(2) Vicarious Liability For a Child’s Operation of a Motor Vehicle

[¶ 14.] Even assuming that there was a genuine issue of material fact regarding malice, Ault contends that State Auto cannot recover because the vicarious liability statute does not apply to damages resulting from a child’s operation of a motor vehicle. This requires us to construe the statute, which we do de novo. Doe v. Quiring, 2004 SD 101, ¶ 8, 686 N.W.2d 918, 920 (citation omitted).

[¶ 15.] The first sentence of SDCL 25-5-15 imposes vicarious liability for the malicious and willful acts of children. However, the second sentence contains two modifying clauses. The first modifying clause limits recovery “to actual damages of fifteen hundred dollars and the taxable court costs.... ” Id. Immediately thereafter, a second modifying clause provides “and does not apply to damages proximately caused through the operation of a motor vehicle by the minor child or children.” Id.

[¶ 16.] The parties disagree as to what part of the statute this second clause modifies. Ault contends that both clauses modify the subject of the second sentence, which is the vicarious liability “recovery.” Under Ault’s construction, “recovery” would be generally limited to $1500 by the first clause, and under the second clause, no “recovery” would be permitted for damages caused through a child’s operation of a motor vehicle. On the other hand, State Auto contends that the second clause only limits the preceding modifying clause (the liability limit of $1500). Therefore, State Auto contends that the second clause only eliminates the $1500 liability limit in auto cases and does not eliminate vicarious liability altogether.

[¶ 17.] To support its argument, State Auto relies upon the doctrine of the last antecedent.

It is the general rule of statutory as well as grammatical construction that a modifying clause is confined to the last antecedent unless there is something in the subject matter or dominant purpose which requires a different interpretation.

Estate of Fisher v. Fisher, 2002 SD 62, ¶ 13, 645 N.W.2d 841, 845 (citation omitted). This rule does not apply if “there is something in the subject matter or dominant purpose [of the statute,] which requires a different interpretation.” Nat’l Farmers Union Prop. and Cas. Co. v. Universal Underwriters Ins. Co., 534 N.W.2d 63, 65 (S.D.1995) (citations omitted). Here, the parties have different views on the subject matter and dominant purpose of the statute. Each party’s view tends to support their different interpretations of the statute. After reviewing these conflicting purposes, we cannot say whether either was the dominant or clear purpose of the legislature.

[¶ 18.] Moreover, in performing statutory interpretation, we have often stated that use of construction aids is not appropriate when the meaning of the statute is clear:

Statutory construction is an exercise to determine legislative intent. In analyzing statutory language we adhere to two primary rules of statutory construction. The first rule is that the language expressed in the statute is the paramount consideration. The second rule is that if the words and phrases in the statute have plain meaning and effect, we should simply declare their meaning and not resort to statutory construction. When we must, however, resort to statutory construction, the intent of the legislature is derived from the plain, ordinary and popular meaning of statutory language.

State v. Johnson, 2004 SD 135, ¶ 5, 691 N.W.2d 319, 321-22 (citation omitted). In this case, we can ascertain the plain meaning and effect of the language without extrinsic aids. Therefore, we do not resort to the doctrine of the last antecedent to determine the statute’s meaning.

[¶ 19.] The meaning of the second sentence is clear. It contains one subject that is modified by two clauses:

In each case the amount of recovery against one or both of the parents shall be limited to actual damages of fifteen hundred dollars and the taxable court costs, and does not apply to damages proximately caused through the operation of a motor vehicle by the minor child or children.

SDCL 25-5-15. (Emphasis added.) This emphasized language reflects that the subject of the sentence is “recovery,” and the two modifying clauses are: “shall be limited to actual damages of fifteen hundred dollars ...” and “does not apply to damages proximately caused through the operation of a motor vehicle.” Significantly, the word separating the two modifying clauses is the conjunction “and.” As such, it joins two equal clauses. Because the two clauses are joined conjunctively, both clauses modify the subject of the sentence, which is “recovery.” Therefore, the plain meaning of SDCL 25-5-15 is that vicarious liability “recovery” is “limited to” $1500 plus costs, and the “recovery” does not apply when the damages were caused by a child’s operation of a motor vehicle. We therefore hold that Ault was not vicariously liable for the property damage caused by B.D. even if her conduct was malicious and willful.

Direct Negligence — Did Ault Owe Any Duty to Close?

[¶ 20.] There are three requirements in a negligence claim: “(1) a duty on the part of the defendant; (2) a failure to perform that duty; and (3) an injury to the plaintiff resulting from such a failure.” Kuehl v. Horner (J.W.) Lumber Co., 2004 SD 48, ¶ 10, 678 N.W.2d 809, 812 (citation omitted). The existence of a duty is a question of law that is reviewed de novo. Bland v. Davison County, 507 N.W.2d 80, 81 (S.D.1993) (citation omitted). While negligence actions are not generally suitable for summary judgment, it is appropriate when the duty question is resolved in favor of the defendant. See id. Because this case was decided on summary judgment, we look at the facts in the light most favorable to the non-moving party and give that party “the benefit of all reasonable inferences.” Kuehl, 2004 SD 48, ¶ 16, 678 N.W.2d at 813 (citation omitted).

Duty to Keep a Home Secured in a Gratuitous Undertaking

[¶ 21.] State Auto contends that Ault, after watering Close’s plants, letting the cat in, and checking his home, owed him a duty to re-secure the home upon leaving. State Auto argues this duty arose out of their relationship in which Ault was apparently watching and taking care of Close’s home. State Auto further argues that Ault had a duty to keep the home secured because it was foreseeable that if she did not keep the home locked, an unauthorized person could enter and cause harm to the home or its contents.

[¶ 22.] “Generally, the law imposes no duty to prevent the misconduct of a third person.” Walther v. KPKA Meadowlands Ltd. Partnership, 1998 SD 78, ¶ 17, 581 N.W.2d 527, 581 (citing Gleason v. Peters, 1997 SD 102, ¶ 8, 568 N.W.2d 482, 484; Tipton v. Town of Tabor, 1997 SD 96, ¶ 12, 567 N.W.2d 351, 357 (Tipton II)). However, “[a] duty can be created by ... common law.” Walther, 1998 SD 78, ¶ 38, 581 N.W.2d at 535 (citing Poelstra v. Basin Elec. Power Coop., 1996 SD 36, ¶ 11, 545 N.W.2d 823, 826). There are “two essential elements required in the imposition of a duty to protect against” the misconduct of a third person: (1) the existence of a special relationship between the parties and (2) a finding that wrongful activity is foreseeable. Small v. McKennan Hosp., 437 N.W.2d 194, 199 (S.D.1989) (citing Restatement (Second) of Torts § 344 (1965)). See also Walther, 1998 SD 78, ¶ 41, 581 N.W.2d at 535.

1. Special relationship

[¶ 23.] “On the whole, we recognize no general duty to protect one’s fellow human beings.... If a duty exists for such protection, it must originate from some special relationship imposing an obligation to protect another ... based on a position of dependence intrinsic to the relationship.” Smith ex rel. Ross v. Lagow Const. & Developing Co., 2002 SD 37, ¶ 12, 642 N.W.2d 187, 190-91 (citing Restatement (Second) of Torts § 314A (1965)). However, the Restatement (Second) of Torts § 323 (1965), also restates the common-law gratuitous undertaking rule that:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if
(a) his failure to exercise such care increases the risk of such harm, or
(b) the harm is suffered because of the other’s reliance upon the undertaking.

Gregor v. Cady, 82 Me. 131, 19 A. 108, 108 (1889), more specifically explained this common law duty:

while it is generally true with respect to gratuitous contracts, that for nonfea-sance no action lies, still for misfeasance an action on the case may be maintained, inasmuch as “the confidence induced by undertaking any service for another is a sufficient legal consideration to create a duty in the performance of it.” ... If a party makes a gratuitous engagement, and actually enters upon the execution of the business, and does it amiss, through the want of due care, by which damage ensues to the other party, an action will lie for this misfeasance.

(Citations omitted). The court in Kline v. 1500 Massachusetts Ave. Apartment Corp. et al., 439 F.2d 477, 483 (D.C.Cir.1970), explained the basis for the duty:

[when] the ability of one of the parties to provide for his own protection has been limited in some way by his submission to the control of the other, a duty should be imposed upon the one possessing control (and thus the power to act) to take reasonable precautions to protect the other one from [acts] by third parties which, at least, could reasonably have been anticipated.

While Kline involved a landlord-tenant relationship, the court indicated that this theory of liability applied to other relationships. The Kline court explained that in these situations, the duty is imposed because only the party responsible is “in the position to take the necessary acts of protection required.” Id. at 484. Accordingly, under the common law rule, duties have been found in various relationships where the actor engages in a gratuitous undertaking for a person who is harmed.

[¶ 24.] We must then examine the Close-Ault relationship. Under the summary judgment standard of review, we must assume that Ault had a key to Close’s home so that she could care for the cat, water his plants, and watch his home. These facts suggest that Ault had undertaken to watch and care for her father’s home while he was on vacation. In performing that gratuitous undertaking, only Ault was in the position to take the neees-sary measures to keep the home secured. Furthermore, the failure to exercise such reasonable care increased the risk of harm. Thus, when the facts are viewed in a light most favorable to State Auto, we conclude that the type of special relationship imposing a duty may have existed in this case.

2. Foreseeability

[¶ 25.] We also believe that it was foreseeable that failure to re-secure the home could result in harm to Close’s property. Wrongful activity can be foreseeable upon common experience. See Small, 437 N.W.2d at 201 (citing Dick v. Great South Bay Co., 106 Misc.2d 686, 435 N.Y.S.2d 240 (N.Y.CivCt 1981)). See also Mullins v. Pine Manor College, 389 Mass. 47, 449 N.E.2d 331 (1983); Sally G. v. Orange Glen Estates Homeowners, 227 Cal.Rptr. 559 (Cal.Ct.App.1986). We use the “totality of circumstances test” in evaluating foreseeability. Small, 437 N.W.2d at 201. Liability is not contingent upon foreseeability of the “extent of the harm or the manner in which it occurred.” Ward v. LaCreek Elec. Ass’n, 83 S.D. 584, 588, 163 N.W.2d 344, 346 (citations omitted). This means that the exact harm need not be foreseeable. Rather, the harm need only be -within the class of reasonably foreseeable hazards that the duty exists to prevent. Sanchez v. State of New York, 99 N.Y.2d 247, 252, 754 N.Y.S.2d 621, 624, 784 N.E.2d 675, 678 (2002). Therefore, we also conclude that it may have been reasonably foreseeable that the failure to keep Close’s home locked would result in damage to Close’s home or its contents.

[¶26.] Because the risk of harm was foreseeable, and because Ault may have engaged in a gratuitous undertaking, a duty may have arisen to exercise due care in providing those services if the failure to exercise reasonable care increased the risk of harm. We are not suggesting that the owner has a duty to third parties to lock their own home. We only conclude that on summary judgment review, a preferential view of these facts suggests that in undertaking to take care of Close’s home, Ault may have owed Close a duty to keep the home secured under the gratuitous undertaking rule. Whether the requisite elements of that duty actually existed must await a remand to the trial court. Furthermore, whether Ault breached that duty and whether the breach was a proximate cause of State Auto’s damages are questions for the jury. See Laber v. Koch, 383 N.W.2d 490, 493 (S.D.1986).

Duty To Not Encourage Driving Without a License

[¶ 27.] State Auto argues that Ault had a duty to not encourage her daughter to drive without a driver’s license. State Auto contends that it “was foreseeable that Ault’s encouragement of B.D.’s driving [by previously allowing her to drive Ault’s vehicle without a license] would prompt B.D. to drive a vehicle in the future.” Although there is a dispute of fact about this issue, for purposes of summary judgment we must assume that Ault had previously permitted B.D. to drive without a license. From this, State Auto contends that Ault had a duty to Close “because it was foreseeable that Ault’s encouragement of B.D.’s driving would prompt B.D. to drive a vehicle in the future without sufficient skills and licensing.”

flT 28.] However, this Court has previously indicated that the “lack of a driver’s license is not evidence of negligence in the operation of a motor vehicle.” Amdahl v. Sarges, 405 N.W.2d 638, 639 (S.D.1987). In Amdahl, we agreed with the Indiana Supreme Court in Opple v. Ray, 208 Ind. 450, 195 N.E. 81, 83 (1935), that the “mere fact of minority or lack of a [driver’s] license” cannot be the sole facts upon which negligence is predicated. 405 N.W.2d at 639-40. That conclusion is especially applicable here, where State Auto has not identified any fact suggesting inadequate driving skills and B.D. was old enough to legally drive. Although State Auto has identified one “serious incident with alcohol” and B.D.’s prior operation of a motor vehicle with her mother, State Auto has not tied those facts to inadequate driving skills. While we do not condone permitting an unlicensed person to drive, we cannot say that such conduct imposed a duty on Ault in this case. These facts are insufficient to establish a duty between Ault and Close with respect to B.D.’s alleged previous driving.

Duty to Better Supervise a Child

[¶ 29.] State Auto finally contends that Ault had a duty to better supervise her daughter that day. While third parties generally have no duty to control the actions of others, parents do have a limited duty to control the actions of their children. See Restatement (Second) of Torts § 315-16 (1965).

A parent is under a duty to exercise reasonable care so to control his minor child as to prevent it from intentionally harming others or from so conducting itself as to create an unreasonable risk of bodily harm to them, if the parent
(a) knows or has reason to know that he has the ability to control his child, and
(b) knows or should know of the necessity and opportunity for exercising such control.

Restatement (Second) of Torts § 316. Under this rule, a parent only has the duty “to exercise such ability to control his child as he in fact has at the time when he has the opportunity to exercise it and knows the necessity of so doing.” Id. cmt. b.

[¶ 30.] State Auto contends that “Ault had reason to know that she had the ability, necessity, and opportunity to control B.D.” However, the record reflects that on the morning of the accident, Ault dropped B.D. off at a friend’s house where B.D. was scheduled to spend the day and night. The record further reflects that Ault did not know that B.D. would be at Close’s home that day. Finally, the record reflects that while B.D. had previously gone swimming at Close’s home, it was “[n]ot that often” and B.D. had never gone to Close’s home with just a friend. These facts are uncontested and do not generally reflect the necessity and opportunity to better control B.D. on that day.

[¶ 31.] State Auto, however, contends that the fact that Ault did not know B.D. would go to Close’s home on the day of the accident was evidence of her failure to exercise reasonable control. We disagree. There is no dispute that arrangements were made for B.D. to be at her friend’s home. Moreover, State Auto has not identified any other fact or inference indicating that Ault had reason to know or should have known of the necessity and opportunity to intercede and exercise further control over B.D. after those arrangements were made. On the contrary, we see no record evidence of a history of B.D. entering people’s homes or taking vehicles. Additionally, State Auto has not identified any additional measures that Ault should have taken to “better” control B.D. Therefore, we see nothing in the record suggesting that “B.D.’s past conduct should give any parent a reason to better monitor, supervise, and control” the activities of their children any more than Ault already had. Because the parties’ statements of fact reflect that Ault was aware of where her daughter was supposed to be on the day of the accident, and because the statements do not reflect that Ault’s expected custodial arrangement was inadequate, State Auto has failed to establish a duty to further control or better supervise B.D.

[¶ 32.] We therefore affirm on all issues, except the direct negligence action alleging a breach of duty in a gratuitous undertaking. That issue is remanded for reconsideration by the court after development of the factual record.

[¶ 33.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and MEIERHENRY, Justices, concur.

      . Stale Auto contends that B.D. "stole” the vehicle from Close's garage. For purposes of this case, it is immaterial whether the vehicle was "stolen or borrowed.” There is no dispute that B.D. took her grandfather's vehicle without permission.

      . The trial court dismissed all claims against Ault, but did not dismiss the claims against B.D. The trial court certified its judgment as a ■ final order pursuant to SDCL 15-6-54(b). Neither party has contested the certification.

      . SDCL 25-5-14 provides:
      Except as provided by § 25-5-15, neither parent nor child is answerable as such, for the act of the other.

      . Ault asserts that the “logical conclusion [is] that the legislature intended to exempt parents from liability for damages caused by their children’s motor vehicle accidents.”
      State Auto responds that holding parents responsible for the actions of their children is consistent with South Dakota's uninsured and underinsured motorist statutes in that the risk of injuries should not fall on innocent third parties. However, the Legislature could not have had the uninsured and underinsured statutes in mind because they were not adopted until 1966 and 1975, while the vicarious liability statute was enacted in 1957. Furthermore, we observe that SDCL 25-5-15 is intended to allow third parties to recover from the parents of minor children, while the uninsured and underinsured motorist statutes allow an accident victim to recover from their own insurance company. Therefore, the uninsured/underinsured motorist statutes do not reveal the intent or purpose of SDCL 25-5-15.
      State Auto also cites several cases in which a parent’s insurance company has provided vicarious liability coverage for a child’s malicious acts. State Auto argues that because insurance coverage is available for the malicious and willful acts of children, SDCL 25-5-15 should be interpreted to permit third parties to recover when a child is driving an automobile. However, the majority of State Auto’s cases involved a parent’s homeowner's, not auto, insurance. Furthermore, there is no evidence in this record suggesting that the Legislature intended to impose vicarious liability because parents could obtain auto or homeowner's insurance that covers malicious and willful acts of children.

      . We have previously stated that while we are not bound by the Restatements of the Law, we have nonetheless “found its reasoning persuasive in many instances.” Chem-Age Industries, Inc. v. Glover, 2002 SD 122, 133, 652 N.W.2d 756, 770.

      . For example, one who agreed to watch another’s child “had a duty as a matter of law to exercise a reasonable degree of care in protecting [the child] from reasonably foreseeable harm.” Barfield By and Through Barfield v. Langley, 432 So.2d 748, 749 (Fla.Dist.Ct.App.1983). In Rogers v. Murch, 253 Mass. 467, 149 N.E. 202, 203 (1925) an auto repair shop kept a vehicle inside the locked shop at night. Upon finding that the vehicle was stolen and that there was evidence that a window was left unlocked, the court concluded that a “jury could properly find that reasonable care and prudence required that the premises should have been more securely safeguarded by other or additional locks, or ... by a night watchman.” In Walsh v. Hackensack Water Co., 13 N.J. Misc. 815, 181 A. 422, 422-23 (1935), the defendant's employees were under no obligation to remove a meter because there was “neither privity of estate nor privity of contract between them.” However, it became its duty to perform that work, even if it was in the first instance not obliged to do so, in a reasonably careful manner “[f]or failure to do so liability is imposed upon them, not by reason of a duty arising from the contract, but upon the doctrine that one who undertakes to perform such work, even if done gratuitously, and does it negligently, whereby damage results, is liable for such negligence.” In Motors Ins. Corp. v. American Garages Inc., 94 Misc.2d 338, 404 N.Y.S.2d 803, 806 (N.Y.CivCt 1978), judgment affirmed by Motors Ins. Corp. v. American Garages Inc., 98 Misc.2d 887, 414 N.Y.S.2d 841 (N.Y.AppDiv 1979), a garage attendant kept duplicate keys on a pegboard in an unlocked garage office. The court held that when a car was subsequently stolen and where the occurrence would not have taken place but for want of proper care, “then the responsibility for the loss incurred should be on the person responsible for such lack of care.”

      . See SDCL 32-12-12, which provides:
      A restricted minor’s permit may be issued, upon application and payment of the proper fees as provided in § 32-12-16, to a minor at least fourteen years of age but less than eighteen years of age who has successfully passed all applicable tests and completed the requirements of an instruction permit as provided in § 32-12-11 or 32-12-11.1 and has not been convicted of a traffic violation during the past six months. For any such minor who has successfully completed a driver education course that has been approved by the Department of Education or a driver education course that the secretary of the department of public safely has determined has been approved by a state government agency in another state, the required minimum time period for holding the instruction permit in order to qualify for the restricted minor's permit is ninety continuous days. A restricted minor's permit entitles the holder, while having the permit in immediate physical possession, to operate a motor vehicle during the hours of 6 a.m. to 10 p.m. standard time if the motor vehicle is being operated with the permission of the holder's parent or guardian and during the hours of 10 p.m. to 6 a.m. if the motor vehicle is being operated under the direction of the holder’s parent or guardian who is occupying a seat beside the holder. The restrictions as to time of operation and operation under the direction of a parent or guardian do not apply to the holder of a valid restricted minor's permit operating a self-propelled agricultural machine which is not subject to registration under chapter 32-5.

      . State Auto cites Johnson v. Glidden, 11 S.D. 237, 76 N.W. 933 (1898), for the proposition that if a parent knows their child is using a firearm in a careless or negligent manner, the parent has a duty to impose his parental authority to protect others. However, State Auto's statement of material facts does not identify any fact suggesting the level of knowledge present in Glidden.


source: Caselaw Access Project

author: LAVORATO, Chief Justice.

license: Public Domain

text:
    FARMERS NATIONAL BANK OF WINFIELD, Appellant, v. WINFIELD IMPLEMENT CO., LTD., an Iowa Corporation, and Jerry Steele a/k/a Jerry D. Steele, Appellees.
    No. 03-1772.
    Supreme Court of Iowa.
    July 22, 2005.
    Rehearing Denied Aug. 29, 2005.
    Wm. Scott Power and Brent Ruther of Aspelmeier, Fisch, Power, Engberg & Helling, P.L.C., Burlington, for appellant.
    Myron L. Gookin of Foss, Kuiken, Goo-kin & Cochran, P.C., Fairfield, for appel-lees.
   LAVORATO, Chief Justice.

This appeal presents the question whether a bank’s deposit of proceeds from promissory notes constitutes payment of a shortage in a depositor’s checking account that resulted from overdrafts. The bank sued the depositor and a shareholder of the depositor who had signed one of the promissory notes and an account agreement in which he agreed to be liable for any shortage resulting from overdrafts. The district court held that the deposit constituted such payment and sustained a motion for summary judgment filed by the defendants. The court of appeals reversed and remanded for further proceedings. On further review, because we agree with the district court, we vacate the court of appeals decision and affirm the district court judgment.

I. Scope of Review.

We review a ruling on a motion for summary judgment for errors at law. Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005). Summary judgment must be granted

if the pleadings, depositions, answers to interrogatories, and admissions on file, together -with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Iowa R. Civ. P. 1.981(3). Summary judgment is appropriate if the only conflict concerns the legal consequences of undisputed facts. City of Fairfield v. Harper Drilling Co., 692 N.W.2d 681, 683 (Iowa 2005).

II. Facts.

The following facts, as gleaned from the pleadings, answers to interrogatories, and depositions, are undisputed. In August 1992, Jerry Dean Steele and Jim Hassen-fritz purchased the assets of Winfield Implement Co., Ltd., an Iowa corporation. Hassenfritz had a fifty-one percent ownership interest, and Steele had a forty-nine percent ownership interest.

On April 1, 1997, Farmers National Bank of Winfield (Bank) and Winfield Implement Co., Ltd. (Winfield Implement) entered into a written account agreement for a corporate checking account for Win-field Implement. The following language about liability appeared on page two of the agreement: “Each of you also agrees to be jointly and severally (individually) liable for any account shortage resulting from charges or overdrafts, whether caused by you or another with access to this account.” Steele and Jeff Suter signed the agreement. (Suter is not involved in this litigation.)

From March 2001 through the end of September 2001, the checking account experienced overdrafts. As of September 26, 2001, the account had a negative balance of $372,068.81. On September 27 the account had a negative balance of $288,983.26. On September 28 the account had a positive balance of $7634.55.

The changes in the account balances resulted from the following transactions. On September 27 Steele and his wife signed a promissory note for $83,000 to the Bank. The cash proceeds from this note were applied to the checking account. The bank statement describes the transaction as a “customer deposit.” On the same day, Hassenfritz and his wife signed a promissory note for $290,000 to the Bank. On September 28 the cash proceeds from this note were likewise applied to the checking account and identified as a “customer deposit.” As a result of this last deposit, the checking account had a positive balance.

The amounts of the promissory notes were determined on the basis that Hassen-fritz owed approximately $290,000 to Win-field Implement. So Hassenfritz signed a note for that amount. Steele signed a note for the difference and a little extra to make the account have a positive balance.

On April 18, 2002, Steele paid his note in full. Hassenfritz made a payment of $25,358.21 on his note, of which $21,997.30 was applied to the principal amount. Assets of Winfield Implement were sold for $60,308.93, of which $53,032.57 was also applied to the principal amount. A pickup truck belonging to Winfield Implement was sold for $2963.95, all of which was applied to the principal amount of Hassen-fritz’s note. After these credits, there remained an unpaid balance of $217,934.08 on the note.

III. Proceedings.

In October 2002 the Bank sued Winfield Implement and Steele for the balance outstanding on Hassenfritz’s note in the amount of $217,934.08, together with interest, costs, and attorney fees. The Bank sued Winfield Implement as the account holder. The Bank’s suit against Steele was based on the written account agreement in which he agreed to be liable for any account shortage resulting from overdrafts.

The Bank filed a motion for summary judgment, as did Winfield Implement and Steele [hereinafter defendants]. The district court denied the Bank’s motion but granted the defendants’ motion. The district court noted that the overdrafts were paid in full by the deposits on September 27 and 28, 2001, resulting in a positive checking account balance. The court therefore concluded that the Bank’s “theory of recovery fails because no overdraft exists.”

Following the district court’s denial of the Bank’s motion to enlarge and amend findings and conclusions, see Iowa R. Civ. P. 1.904(2), the Bank appealed.

We transferred the case to the court of appeals, which reversed and remanded the case for further proceedings.

IV. Issue.

The issue presented is whether the proceeds from the promissory notes that were applied to the shortage caused by the overdrafts constituted payment of the shortage.

V. Analysis.

The Bank alleged in its petition that “[biased on the written account agreement, both defendants are jointly and severally liable to plaintiff for the account overdrafts.” An overdraft occurs when the bank pays from its funds “a check drawn on it by a depositor who does not have sufficient funds on deposit to pay the check.” Video Trax, Inc. v. NationsBank, N.A., 33 F.Supp.2d 1041, 1045 n. 3 (S.D.Fla.1998), aff'd per curiam, 205 F.3d 1358 (11th Cir.2000); see also Black’s Law Dictionary 1136 (8th ed.2004) (defining overdraft as “[a] withdrawal of money from a bank in excess of the balance on deposit”).

It is undisputed that there were overdrafts in the Winfield Implement checking account that resulted in a negative account balance. However, when the cash proceeds from Steele’s and Hassenfritz’s promissory notes were applied to the account, the account balance went from a negative figure to a positive one. As a result, the account overdrafts — the sole subject of the Bank’s petition — no longer existed at the time the petition was filed. The defendants correctly argued in their motion for summary judgment that

[t]he overdrafts complained of in the petition have been fully satisfied and paid by virtue of the promissory notes executed by Jerry Steele and James Hassenfritz. Steele has fully paid his promissory note. Steele has no liability for the Hassenfritz note which remains in default. Plaintiffs only remedy should be against Hassenfritz on the Hassenfritz note.

In their application for further review, the defendants also correctly argue that “[t]his was not just a replacement of one piece of paper for another representing a debt.” Rather, once the proceeds of the promissory notes were deposited into the Winfield Implement checking account, “[t]here was no longer a shortage upon which personal liability could occur under the language of the checking account agreement.”

The Bank relies heavily on Orcutt v. Hanson, 163 N.W.2d 914 (Iowa 1969). The issue in that case was whether the execution and acceptance of a promissory note was full and complete settlement of an open account. Orcutt, 163 N.W.2d at 915-16. In his affidavit, the defendant stated that the note was given by him and accepted by the plaintiff as a full and complete settlement of the account. Id. at 916. This statement was enough to convince this court that a genuine issue of material fact existed as to whether the execution and acceptance of the note was intended as a full and complete settlement of the open account or only a conditional payment as the plaintiff contended. Id. at 916-17. The court stated the general rule that a promissory

note given by a debtor for a precedent debt will not be held to extinguish the debt in the absence of an agreement to that effect. The mere promise in writing to pay cannot of itself be regarded as an effective payment....

Id. at 917 (emphasis added) (citations omitted).

Here, there was more than a “mere promise in writing to pay.” Id. The proceeds of the promissory notes were applied to the checking account shortage in a manner described by the Bank as a “customer deposit,” thereby completely eliminating the overdrafts and shortage. See 60 Am. Jur.2d Payment § 51, at 745 (2003) (“If by agreement a note is taken in absolute payment of a debt, the debt is extinguished whether or [not] the note is paid, leaving the creditor’s remedy on the note.” (Footnotes omitted.)).

VI. Disposition.

The district court correctly concluded that the shortage resulting from the overdrafts was paid in full by the deposits of the proceeds from the two promissory notes. Because no genuine issue of material fact exists on that point, we conclude the district court correctly granted the defendants’ motion for summary judgment and correctly denied the Bank’s similar motion. We therefore vacate the court of appeals decision and affirm the district court judgment.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.

All justices concur except WIGGINS, J., who takes no part.


author: TERNUS, Justice.

text:
    Roger BELLVILLE, Administrator of the Estate of Sue Ellen Bellville, Deceased, and the Estate of Sue Ellen Bellville, Appellees, and State of Iowa ex rel. Civil Reparations Trust Fund, Intervenor-Appellee, v. FARM BUREAU MUTUAL INSURANCE COMPANY, Appellant.
    No. 02-1343.
    Supreme Court of Iowa.
    July 29, 2005.
    Rehearing Denied Aug. 29, 2005.

      Thomas D. Hanson and Barry A. Russell of Hanson, Bjork & Russell, L.L.P., Des Moines, and Mark D. Sherinian, West Des Moines, for appellant.
    John R. Hearn, Des Moines, and John R. Ward, Des Moines, for appellees.
    Thomas J. Miller, Attorney General, Craig Kelinson, Special Assistant Attorney General, and Richard E. Mull, Assistant Attorney General, Ames, for intervenor-appellee.
    Tom L. Drew of Drew Law Firm P.C., Des Moines, for amicus curiae Iowa Trial Lawyers Association.
   TERNUS, Justice.

The plaintiffs, Roger Bellville and the Estate of Sue Ellen Bellville, obtained a judgment against the Bellvilles’ underin-sured motorist (UIM) carrier, defendant Farm Bureau Mutual Insurance Company, for extracontractual and punitive damages. The State of Iowa intervened on appeal to protect its interest in a statutory share of the punitive damage award.

The Iowa Court of Appeals reversed the judgment, ruling the district court erred in failing to grant Farm Bureau’s motion for directed verdict. This court granted further review. Upon our examination of the record and consideration of the arguments of the parties, we reach the same conclusion as the court of appeals, but for slightly different reasons. Therefore, we vacate the decision of the court of appeals, reverse the district court judgment, and remand for entry of judgment in favor of Farm Bureau.

I. Background, Facts and Proceedings.

On October 9, 1999, Roger Bellville (Bellville) and his wife, Sue Ellen, were involved in a motor vehicle accident with Guy Schueler. Sue Ellen died at the scene; Bellville was unharmed.

At the time of the accident, Schueler had an automobile insurance policy with a liability limit of $50,000. Although this policy provided coverage for his liability arising out of the accident, Schueler owned few other assets. Bellville carried under-insured motorist coverage with Farm Bureau with limits of $300,000.

Eárly in 2000 Bellville’s attorney demanded the limits of the Farm Bureau policy and also requested that Farm Bureau consent to Bellville’s settlement with Schueler for the limits of Schueler’s liability insurance coverage. Negotiations ensued, but Farm Bureau refused to pay Bellville’s reduced demand for a $270,000 payment under the UIM coverage. In addition, Farm Bureau refused to consent to Bellville’s settlement with Schueler, asserting it had no duty to do so.

On April 13, 2000, Bellville sued Farm Bureau to recover under the UIM coverage; he also alleged a tort claim for bad faith. (Although Bellville and the estate are named plaintiffs, we will refer to them jointly as Bellville or the plaintiff in the remainder of this opinion.) Bellville’s contractual claim was tried first, resulting in an award of the full $300,000 in UIM coverage. The bad faith action was then tried to a jury based on two grounds: (1) Farm Bureau’s undervaluation of Bellville’s UIM claim; and (2) Farm Bureau’s refusal to consent to Bellville’s settlement with the underinsured motorist. Farm Bureau’s motion for directed verdict was denied, and the jury returned a verdict in favor of the plaintiff, finding bad faith on both grounds. The jury awarded compensatory and punitive damages. The State then intervened on behalf of the Civil Reparations Trust Fund to claim its share of the punitive damages award pursuant to Iowa Code section 668A.1(2)(6) (2001).

Farm Bureau appealed and the case was transferred to the court of appeals. The court of appeals reversed and remanded, finding the evidence was insufficient to prove Farm Bureau lacked a reasonable basis for its valuation of Bellville’s claim or for refusing to consent to settlement. The court concluded, therefore, that the district court erred in failing to direct a verdict in favor of Farm Bureau.

This court granted Bellville’s application for further review, as well as the Iowa Trial Lawyers Association’s request to file a brief in support of the application. Although multiple issues are raised in the parties’ briefs, we find it necessary to address only one: the sufficiency of the evidence to support a finding of bad faith.

II. Governing Principles of Law.

A. Standard of review. Farm Bureau contends the district court erred in failing to grant its motion for directed verdict. A directed verdict for the defendant was required only if there was no substantial evidence to support the elements of the plaintiffs claim. Thompson v. U.S. Fid. & Guar. Co., 559 N.W.2d 288, 290-91 (Iowa 1997). Substantial evidence means evidence that a “ ‘reasonable mind would accept as adequate to reach a conclusion.’ ” Id. (citation omitted). In determining whether substantial evidence was offered, the trial court was required to view the evidence in the light most favorable to the plaintiff, “regardless of whether it was contradicted.” Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d 250, 251 (Iowa 1991). The court was also obligated to draw every legitimate inference from this evidence in support of the plaintiff. Id. We review the trial court’s ruling on a motion for directed verdict for the correction of errors of law. See Wolbers v. Finley Hosp., 673 N.W.2d 728, 734 (Iowa 2003).

B. Elements of bad faith claim. To establish Farm Bureau’s bad faith, the plaintiff was required to prove (1) Farm Bureau had no reasonable basis for denying the plaintiffs claim or for refusing to consent to settlement, and (2) the defendant knew or had reason to know that its denial or refusal was without reasonable basis. Sampson v. Am. Standard Ins. Co., 582 N.W.2d 146, 149 (Iowa 1998). The first element is an objective one; the second element is subjective. Reuter, 469 N.W.2d at 253.

1. Objective element: lack of reasonable basis. A reasonable basis exists for denial of policy benefits if the insured’s claim is fairly debatable either on a matter of fact or law. Sampson, 582 N.W.2d at 150; Morgan v. Am. Family Mut. Ins. Co., 534 N.W.2d 92, 96 (Iowa 1995), overruled on other grounds by Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 784 (Iowa 2000). A claim is “fairly debatable” when it is open to dispute on any logical basis. See Morgan, 534 N.W.2d at 96; 14 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 204:28, at 204-43 (1999) (defining “debatable reason” as “an arguable reason, a reason that is open to dispute or question”) [hereinafter “Couch on Insurance 3d”]. Stated another way, if reasonable minds can differ on the coverage-determining facts or law, then the claim is fairly debatable. See William T. Barker & Paul E.B. Glad, Use of Summary Judgment in Defense of Bad Faith Actions Involving First-Party Insurance, 30 Tort & Ins. L.J. 49, 56 (1994) [hereinafter “Barker & Glad Article”].

The fact that the insurer’s position is ultimately found to lack merit is not sufficient by itself to establish the first element of a bad faith claim. Cent. Life Ins. Co. v. Aetna Cas. & Sur. Co., 466 N.W.2d 257, 263 (Iowa 1991); see Thompson, 559 N.W.2d at 292. The focus is on the existence of a debatable issue, not on which party was correct. See Thompson, 559 N.W.2d at 292; see also Myers v. Broussard, 696 So.2d 88, 104 (La.Ct.App.1997) (stating fact that insurer erroneously evaluated claim does not equate to arbitrary and capricious conduct); State Farm Lloyds, Inc. v. Polasek, 847 S.W.2d 279, 286-87 (Tex.App.1992) (“The issue in the bad faith case is not whether the factfinder believes the evidence that State Farm believed when it denied the claim; the issue is whether such evidence existed.”).

Whether a claim is fairly debatable can generally be decided as a matter of law by the court. See Thompson, 559 N.W.2d at 290; Clark-Peterson Co. v. Indep. Ins. Assocs., Ltd., 514 N.W.2d 912, 914 (Iowa 1994); Wetherbee v. Econ. Fire & Cas. Co., 508 N.W.2d 657, 662 (Iowa 1993). That is because “ ‘[w]here an objectively reasonable basis for denial of a claim actually exists, the insurer cannot be held liable for bad faith as a matter of law.’ ” Gardner v. Hartford Ins. Accident & Indem. Co., 659 N.W.2d 198, 206 (Iowa 2003) (quoting Morgan, 534 N.W.2d at 97) (emphasis added). As one court has explained, “[e]ourts and juries do not weigh the conflicting evidence that was before the insurer; they decide whether evidence existed to justify denial of the claim.” Pó-tasele, 847 S.W.2d at 285. Thus, if it is undisputed that evidence existed creating a genuine dispute as to the negligence of an uninsured or underinsured motorist, the comparative fault of the insured, the nature and extent of the insured’s injuries, or the value of the insured’s damages, a court can almost always decide that the claim was fairly debatable as a matter of law. See, e.g., Sampson, 582 N.W.2d at 152 (holding district court properly decided bad faith claim as a matter of law where nature and extent of insured’s injuries were debatable); Cent. Life Ins. Co., 466 N.W.2d at 263 (holding insurer entitled to judgment as a matter of law where there was a good faith dispute on the amount of the insured’s damages); Dirks v. Farm Bureau Mut. Ins. Co., 465 N.W.2d 857, 862 (Iowa 1991) (holding insurer entitled to directed verdict on bad faith claim where there was conflicting information as to who was at fault in underlying automobile accident); Barker & Glad Article, 30 Tort & Ins. L.J. at 57 (same). One treatise has explained the standard this way:

[A]n insurer is innocent of bad faith as a matter of law ... if the insurer took a position in regard to the claim that reasonable minds could hold. Unless the trial court is prepared to grant a directed verdict to the insured on his claim under the policy and to hold that reasonable minds could not disagree as to the insured’s entitlement to proceeds under the policy, it follows that reasonable minds could disagree about the insured’s entitlement to policy proceeds. Therefore, the insurer should be entitled to a directed verdict in its favor on the insured’s bad faith claim unless the insured is entitled to a directed verdict in his favor on the policy claim.

Stephen S. Ashley, Bad Faith Actions Liability & Damages § 5:04, at 5-17 to 5-18 (2d ed.1997) (also discussing exceptions to this rule, none of which are implicated here) [hereinafter “Bad Faith Actions ”]; accord Reuter, 469 N.W.2d at 254 (noting that existence of submissible jury question on insured’s entitlement to policy benefits will generally, though not automatically, establish that the issue is fairly debatable); see also Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal.App.4th 335, 108 Cal.Rptr.2d 776, 785, 787 (2001) (stating “as long as there is no dispute as to the underlying facts, it is for the court, not a jury, to decide whether the insurer had ‘proper cause’ [to deny the insured’s claim]”).

2. Subjective element: knowledge of lack of reasonable basis. Even when the insurer lacks a reasonable basis for its denial of a claim, liability for bad faith will not attach unless the insurer knew or should have known that the basis for denying its insured’s claim was unreasonable. Sampson, 582 N.W.2d at 150; Kiner v. Reliance Ins. Co., 463 N.W.2d 9, 13 (Iowa 1990). An insurer’s negligent or sub-par investigation or evaluation of a claim is relevant to the fact finder’s determination of whether the insurer should have known its denial lacked a reasonable basis. Reuter, 469 N.W.2d at 254; Bad Faith Actions § 5:08, at 5-42 (“[A] breach of the duty to investigate constitutes a substitute for knowledge.”). But “an improper investigation, standing alone, is not sufficient cause for recovery if the insurer in fact has an objectively reasonable basis for denying the claim.” Reuter, 469 N.W.2d at 254-55; accord Seastrom v. Farm Bureau Life Ins. Co., 601 N.W.2d 339, 347 (Iowa 1999); Bad Faith Actions § 5:08, at 5-42 (stating a negligent investigation “does not constitute bad faith by itself’). With this background, we turn now to an analysis of the plaintiffs bad faith claim.

III. Refusal to Pay UIM Benefits.

A. Statement of the issue. Bellville’s first claim of bad faith rests on Farm Bureau’s allegedly “unreasonably low offer, deriving from an excessive allocation of fault and an improperly low valuation of death damages.” At the outset, it is necessary to reframe the issue as stated by the plaintiff so our discussion will be consistent with the analytical framework of a bad faith claim as recognized in Iowa. Accordingly, the issue in this first-party bad faith case is not whether Farm Bureau’s offer was “unreasonably low.” The pertinent issue is whether there was no reasonable basis for Farm Bureau’s denial of the plaintiffs demand for a $270,000 payment under the policy. Upon sufficient proof of this element, the remaining issue is whether Farm Bureau had actual or constructive knowledge that its refusal to pay had no reasonable basis. Because we conclude as a matter of law that the defendant had a reasonable basis for not paying the sum demanded by the plaintiff, we discuss only the objective element of the plaintiffs bad faith claim.

B. Summary of evidence. The evidence at trial showed that Farm Bureau refused to pay the plaintiffs demand because it thought the plaintiffs damages had a potential value of only $300,000. In addition, the defendant attributed 30% of the fault to Bellville, which would diminish Bellville’s projected recovery from Schueler. Farm Bureau also factored in Bellville’s $50,000 recovery from Schueler’s liability insurer to further reduce the potential sum recoverable under the UIM coverage.

At trial, the plaintiff introduced expert testimony that the damages sustained by Roger Bellville and the estate of Sue Ellen Bellville as a result of the accident were well over $300,000. The precise figures given by these experts ranged from $600,000 to $1.5 million. As for Bellville’s fault, there were varying opinions. Although all of the plaintiffs experts testified they would have assigned “little or no fault” to Bellville, three of the experts stated that a jury could have assessed as much as 10% fault to Bellville. The fourth expert opined that a jury would have assigned no more than 5% fault to Bellville.

Of course the fact that experts disagreed with Farm Bureau’s valuation of its insured’s claim is insufficient to establish bad faith. Similarly, testimony by these experts that Farm Bureau’s valuation was, in their judgment, “unreasonable” is also inadequate to permit recovery of extracon-tractual damages. See Chateau Chamberay Homeowners Ass’n, 108 Cal.Rptr.2d at 782, 786 (holding expert’s opinion that insurer’s “adjustment and handling of [insured’s] claim was unreasonable and [in bad faith]” did not “raise a triable issue of fact” on whether the insurer had a reasonable basis for disputing insured’s claim). There must be evidence that the basis for Farm Bureau’s valuation was unreasonable. In this respect, the plaintiffs evidence was deficient. We will address the comparative fault issue and the damages issue separately.

C. Bellville’s fault. The record shows Farm Bureau relied on several matters revealed in its investigation of the accident to support its position that some fault would likely be assessed to Bellville. A Farm Bureau claims adjuster obtained the report of the investigating officer from the Cedar Rapids police department, which contained written summaries of statements given by Bellville and Schueler to the officer. In addition, the adjuster interviewed Bellville and Schueler herself. Farm Bureau learned the following facts.

The accident occurred on October 9, 1999, when a motorcycle operated by Bell-ville collided with an automobile driven by Schueler at the intersection of Edgewood Road with 0 Avenue NW in Cedar Rapids, Iowa. 0 Avenue tees into Edgewood Road at this point from the east. The intersection, located on the crest of a hill, is controlled by traffic signals. Neither the weather nor the condition of the road surface was a factor in the accident.

At the time of the collision, Bellville was driving northbound on Edgewood Road; his wife, Sue Ellen, was a passenger. Bellville had been traveling in the outside lane, but in the block before the intersection, the traffic in front of him slowed, so he pulled into the inside lane. He was accelerating as he came up the hill towards the traffic light. As Bellville approached the intersection, he saw the traffic light change to yellow, but he did not think he could stop in time without locking up his brakes. So, he decided to proceed through the intersection.

In the same general time frame, Schueler was proceeding southbound on Edge-wood Road. He pulled into the left-turn lane on Edgewood Road to turn east onto 0 Avenue. When the light turned green, Schueler pulled into the intersection, and then stopped in the intersection to let northbound traffic pass before making his turn. When the light changed to yellow, traffic in the northbound, outside lane slowed to stop at the intersection. Schueler, who did not see Bellville’s motorcycle, then proceeded to turn left. Bellville saw Schueler’s car, but was unable to stop his motorcycle. Bellville’s motorcycle struck the right rear quarter panel of the Schueler vehicle just behind the rear tire. The impact occurred in the center of Bellville’s lane of travel. Sue Ellen Bellville died immediately. No witnesses were identified.

The investigating officer who interviewed Bellville on the day of the accident reported the following account of the accident by Bellville:

As they were traveling in the inside lane of traffic nearing the intersection of 0 Avenue, Bellville said that the light controlling Edgewood Road traffic turned yellow. Roger stated he recalls his wife, Sue, saying to him, “The light’s yellow. You aren’t going to get stopped in time.” Roger said there was a car traveling in the lane to the right of him that was able to stop for the light. However, he did not think he would be able to stop in time because in order to stop, he would have to lock up the brakes and didn’t want to risk falling over, so he decided to proceed through the intersection.
He said prior to going through the intersection, he recalls looking toward a car which was stopped on 0 Avenue NW getting ready to turn onto Edgewood Road that was still stopped and not entering into the intersection, so he figured he was OK to proceed through the intersection.
He says when he looked back ahead of him, he then saw a car making a turn onto eastbound 0 Avenue, and he locked up his brakes to try and stop before hitting it, but was unsuccessful and ran into the rear quarter panel of the vehicle.

The officer also took a written statement from Schueler. Schueler told the officer that he had pulled a quarter of the way into the intersection on a green light and had stopped to let northbound traffic pass before he turned left onto 0 Avenue. He stated that northbound traffic approaching the intersection travels “on a down slope to a valley that Edgewood Road runs through.” He said that he “would lose sight of [northbound vehicles] momentarily because when they drive up from the bottom of the valley you cannot see them.” Schueler claimed that when the light turned yellow, he “looked ahead into the northbound Edgewood Road to make sure it was clear so [he] could complete [his] turn.” He “decided to make the turn onto 0 Avenue NW when [he] saw vehicles traveling in the northbound outside lane of traffic on Edgewood Road slowing to stop at 0 Avenue NW.” As indicated earlier, Schueler did not see the motorcycle that hit his car until he felt the impact of the collision.

A later reconstruction of the accident by the police department put Bellville’s speed at the time he applied his brakes at approximately 33 mph. The speed limit on Edgewood Road in this area was 35 mph.

Based on the information revealed by his investigation, the investigating officer concluded in his official report that a “contributing circumstance” to the accident was that Roger Bellville “Ran Traffic Signal.” He concluded there were no “apparent” contributing circumstances related to Schueler’s driving or his vehicle. The officer requested chemical tests of Bellville for alcohol and drugs; he did not request any of Schueler.

Farm Bureau relied on the officer’s investigation, as well as the officer’s conclusions, in evaluating the legal responsibility of Schueler and Bellville for the accident. Bellville contends the insurer was not entitled to rely on the investigating officer’s report or opinions because neither would be admissible in the trial of the personal injury case. (He argues the report was hearsay and the officer’s opinions were impermissible legal conclusions.) Assuming Bellville is correct concerning the admissibility of this evidence, we are not persuaded that the insurance company should not be able to consider it. The inadmissibility of this evidence does not mean it did not have probative value that a reasonable person would rely on. See Bad Faith Actions § 5A:03, at 5A-11 to 5A-12 (stating insurer should be able to rely on evidence having probative value notwithstanding the fact it would be inadmissible in court); see also Am. Mfrs. Mut. Ins. Co. v. Cupstid, 673 F.Supp. 186, 190 n. 3 (S.D.Miss.1987) (holding insurer could consider inadmissible hearsay statement in deciding whether to pay insured’s claim). Therefore, we hold the possible inadmissibility of the officer’s report and conclusions did not prevent Farm Bureau from considering them in evaluating Bellville’s claim for UIM benefits.

The plaintiff asserts Farm Bureau’s reliance on the investigating officer’s conclusion that Bellville was at fault was unwarranted for the additional reason that “it is likely a mistake.” One of the plaintiffs experts speculated that the officer had the two drivers confused and had meant to indicate in his report that Schueler had run the traffic signal, not Bellville. Another suggested the officer simply made a mistake. No evidence was introduced, however, that the officer had not accurately stated his opinion as reflected in his report. Moreover, the fact the officer requested alcohol and drug testing of Bell-ville and not of Schueler supported a conclusion that the officer was, in fact, focused on Bellville as a cause of the accident and had not inadvertently or mistakenly indicated on the accident report that Bellville had run the traffic signal.

This court has held that “[a]n insurance company is not obligated to disregard the opinion of its own expert in favor of the insured’s expert’s opinion.” Morgan, 534 N.W.2d at 97. Similarly, the insurer here was not obligated to disregard the opinion of the investigating officer simply because different conclusions could be drawn from the facts revealed by the officer’s investigation. See Szumigala v. Nationwide Mut. Ins. Co., 853 F.2d 274, 280-81 (5th Cir.1988) (holding insurer reasonably relied on investigating officer’s report notwithstanding insured’s contention that insurer failed to adequately consider circumstances detracting from officer’s conclusion that insured was at fault in accident); cf. Bushey v. Allstate Ins. Co., 164 Vt. 399, 670 A.2d 807, 810 (1995) (holding insurer could rely on independent medical witness notwithstanding evidence contrary to expert’s opinion). The officer’s objectively prepared report, which placed the blame for the accident on Bellville, clearly provided a reasonable basis for the insurer’s conclusion that Bellville’s fault could be as high as 30%. See Szumigala, 853 F.2d at 280-81 (holding report of deputy who investigated accident, placing blame on insured, provided insurer with a reasonable basis to deny uninsured motorist benefits).

The testimony of the plaintiffs experts that the company inexcusably and unreasonably failed to conduct an additional, more extensive investigation and analysis of the circumstances of the accident is simply not consistent with Iowa law. In first-party insurance situations, there is “no clearly defined duty of investigation” on an insurer; the insurer “may require the insured to present adequate proof of loss before paying the claim.” N. Iowa State Bank v. Allied Mut. Ins. Co., 471 N.W.2d 824, 828 (Iowa 1991). Because Farm Bureau had an objectively reasonable basis to allocate 30% fault to its insured upon receipt of the officer’s report and completion of its interviews of Bellville and Schueler, it had no duty to investigate the liability issue further. Seastrom, 601 N.W.2d at 347; Morgan, 534 N.W.2d at 98; 14 Couch on Insurance 3d § 198:28, at 198-54 (stating generally insurer must conduct “such investigation as is required to determine the existence of coverage under the policy”); Bad Faith Actions § 5:8, at 57 (2d ed. Supp.2004) (“Once an insurer’s investigation [has] revealed evidence sufficient to sustain a denial of the claim, the insurer has no obligation to investigate beyond that point.”). If the insured contended the officer had actually meant to place responsibility for the accident on Schueler rather than Bellville, it was the insured’s obligation to present adequate proof of that fact or to otherwise demonstrate that the officer’s conclusions were patently unreasonable. See Shaffer v. State Farm Mut. Auto. Ins. Co., 246 Ga.App. 244, 540 S.E.2d 227, 228 (2000) (stating insurer was entitled to rely on opinion of independent medical examiner “unless patently wrong based on facts timely brought to the insurer’s attention”).

Bellville’s evidence at trial failed to demonstrate that he brought facts to Farm Bureau’s attention that showed the officer’s report was patently wrong. Rather, Bellville relied on the contention that the circumstances of the accident should have been interpreted more favorably to him. But because the relationship between an insurer and its insured is arms-length with respect to UIM coverage, Farm Bureau was not required to view the facts of the accident in a light most favorable to Bellville. Compare N. Iowa State Bank, 471 N.W.2d at 829 (stating insurer does not occupy a fiduciary relationship to insured when evaluating insured’s claim under policy; rather, parties are in an “arms-length” relationship), with Long v. McAllister, 319 N.W.2d 256, 262 (Iowa 1982) (stating in meeting its fiduciary duty to insured, “insurer must give as much consideration to its insured’s interests as it does to its own”); see also Hutchinson v. Farm Family Cas. Ins. Co., 273 Conn. 33, 867 A.2d 1, 10 (2005) (stating relationship between insured and UIM insurer is adversarial, not fiduciary); Ellwein v. Hartford Accident & Indent. Co., 142 Wash.2d 766, 15 P.3d 640, 647 (2001) (holding relationship between UIM insurer and insured is adversarial, and therefore, insurer does not have to give equal consideration to the insured’s interest), overruled on other grounds by Smith v. Safeco Ins. Co., 150 Wash.2d 478, 78 P.3d 1274, 1278 (2003). Consequently, the mere existence of evidence supporting the fault evaluation asserted by Bellville does not establish bad faith. See Bates v. Jackson Nat’l Life Ins. Co., 927 F.Supp. 1015, 1022 (S.D.Tex.1996) (stating it is not enough for insured to show “ ‘there were other facts suggesting that the claim was valid’ ” (citation omitted)); Polasek, 847 S.W.2d at 286 (stating whether insurer had a reasonable basis for denial of claim “cannot be resolved by looking at the insured’s evidence and deciding that the insurer should have believed it instead of other evidence”); 14 Couch on Insurance 3d § 207:4, at 207-19 to 207-20 (stating “the fact that the insured presented evidence in conflict with the insurer’s evidence is an insufficient basis to assess [extracontractual damages]”).

We conclude as a matter of law that the extent of Bellville’s fault was fairly debatable. See Szumigala, 853 F.2d at 280-81 (holding extent of insured’s liability for accident presented “ ‘a classic jury question’ ” (citation omitted)); Ellwein, 15 P.3d at 646 (affirming dismissal of bad faith claim, holding under strikingly similar facts that insurer was not in bad faith for asserting insured’s comparative fault). Therefore, it was reasonable for Farm Bureau to rely on its assessment of Bellville’s comparative fault to determine its liability under the UIM coverage. Consequently, the insurer’s evaluation of the respective liability of Schueler and Bellville cannot support a finding that Farm Bureau lacked a reasonable basis for its refusal to pay the plaintiffs settlement demand. We now consider the insurer’s valuation of the damages recoverable by Bellville.

D. Damages. As noted earlier, Farm Bureau valued the plaintiffs personal injury claim at $300,000. The actual value of Bellville’s UIM claim' — Schueler’s legal liability to the plaintiff — was established in the contract action between Bell-ville and Farm Bureau. In that trial, a jury determined Bellville had sustained damages of $756,714.95. This figure was broken down as follows: (1) loss of accumulation to the estate: $100,000; (2) loss of support: $150,000; (3) loss of consortium: $500,000; and (4) interest on burial expense: $6,714.95. (The jury also found Bellville was 5% at fault.)

Our analysis of the valuation issue in the bad faith action is assisted by briefly focusing on the components of the plaintiffs damage claim: (1) loss of earnings; (2) loss of support; and (3) loss of consortium. Two of the plaintiffs experts testified that the value of the plaintiffs economic damages — loss of earnings and loss of support-was between $600,000 and $1 million. But Farm Bureau was certainly not acting in bad faith in failing to assess the plaintiffs economic damages at this level. As noted, the actual value of these damage components was only $100,000 for loss of earnings and $150,000 for loss of support. Consequently, the most that could be required of Farm Bureau was that it value the plaintiffs economic damages at $250,000; it certainly had no duty to over value these elements of damage. We turn now to a consideration of the overall value placed on the plaintiffs UIM claim by the parties.

Because Farm Bureau could reasonably attribute 30% fault to Bellville, it was incumbent upon the plaintiff to establish there was no reasonable basis for Farm Bureau to value Bellville’s damages at less than $415,000. Only damages at that level would have warranted a UIM payment of $270,000. We focus on that figure because the bad faith conduct at issue here is Farm Bureau’s refusal to pay the plaintiffs demand for a $270,000 payment under the UIM coverage. Thus, the precise question that must be answered is whether there is sufficient proof that the insurer had no reasonable basis to value its insured’s claim at less than $415,000.

In considering this question, we first address the plaintiffs contention that it was inappropriate for Farm Bureau to consider prior settlements in wrongful death cases in assessing the reasonable value of Bellville’s claim against Schueler. We agree to a point. The measure of liability under the UIM coverage is the tortfeasor’s “legal liability” to the insured. That legal liability is measured by what a jury would award; it is not measured by the amount for which such a case could be settled. Thus, to the extent a specific settlement is affected by factors other than the relative fault of the parties and the anticipated damages, such as limited insurance limits or a coverage question, that settlement figure would not be relevant. Whether the prior settlements upon which Farm Bureau relied were subject to this deficiency is not apparent from the record.

While an insurer cannot necessarily rely on prior settlements to evaluate a UIM claim, neither is an insurer obligated to pay a claim based on the range of jury verdicts rendered in other personal injury cases or based on statistical analyses done by research services, a source cited by the plaintiffs attorneys in their negotiations with Farm Bureau, as well as by the plaintiffs experts in support of their opinions. Jury verdict figures are relevant only insofar as the facts of a particular case are similar to the facts of the case being valued, and even then comparisons are of little predictive value. Cf. Spaur v. Owens-Corning Fiberglas Corp., 510 N.W.2d 854, 869 (Iowa 1994) (stating comparison of verdicts is of little value in determining whether loss-of-consortium award is adequate, due to factual distinctions); Beeck v. Aquaslide 'N’ Dive Corp., 350 N.W.2d 149, 168 (Iowa 1984) (same); accord Thurmon v. Sellers, 62 S.W.3d 145, 161 (Tenn.Ct.App.2001) (stating consortium damages are impossible to generalize, so measurement of such damages must be on a case-by-case basis). Therefore, evidence introduced by the plaintiff of the possible range of jury verdicts reported in certain professional publications will not support a finding that Farm Bureau had no reasonable basis for valuing Bellville’s claim at a sum less than the reported verdicts.

Similarly, testimony that a reasonable insurer would have paid Bellville’s settlement demand is likewise insufficient to support a finding of bad faith. The tort of bad faith is not established by proof of negligence. See United Fire & Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 658 (Iowa 2002) (stating negligent investigation or evaluation of claim will not, standing alone, establish bad faith); Reuter, 469 N.W.2d at 254 (same); Dolan v. Aid Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988) (noting objective element of bad faith claim “makes clear the intentional nature of the tort”). Thus, it is not enough for Bellville to make a showing of unreasonableness. See Polasek, 847 S.W.2d at 285, 286. It was incumbent upon him to negate any reasonable basis for the insurance company’s valuation of his claim.

Having determined that prior settlements and prior verdicts are generally not helpful and that proof of an erroneous, even negligent, evaluation is not enough, we are left to the valuation testimony of the experts. As one might expect, the plaintiffs experts opined that Bellville’s claims had a value well over $300,000, while the defendant’s experts testified that a death case of this type in Iowa would be valued at less than $300,000.

The discrepancy among the expert opinions simply illustrates the obvious: it is difficult, if not impossible, to determine with any precision how the jury will value such a claim, particularly the loss-of-consortium component. See Williams v. Hartford Cas. Ins. Co., 83 F.Supp.2d 567, 575 (E.D.Pa.2000) (noting different value figures put on insured’s claim by insurer, insured, and arbitrator supported conclusion that value of plaintiffs claim “was not reasonably clear”); see also Musorofiti v. Vlcek, 65 Conn.App. 365, 783 A.2d 36, 42 (2001) (noting “ ‘loss of consortium is incapable of precise measurement’ ” (citation omitted)); Spaur, 510 N.W.2d at 870 (“The value of a spouse’s companionship, affection, and aid is difficult to measure.”); Brandon v. County of Richardson, 264 Neb. 1020, 653 N.W.2d 829, 835 (2002) (stating “[t]here is no exact fiscal formula for determination of damages recoverable for loss of society, comfort, and companionship”). As one of the plaintiffs experts observed, “there’s a lot of things that go into valuing these kinds of cases and it’s not a science. There’s nothing exact about it, but there is judgment and experience, and it’s more of an art that you develop” In a similar vein, one court has accurately observed in discussing the valuation of a death claim, “a jury’s response is not necessarily predictable.” Forcucci v. U.S. Fid. & Guar. Co., 11 F.3d 1, 3 (1st Cir.1993) (rejecting argument that insurer’s offer to settle UIM claim was unreasonable).

We conclude as a matter of law that a bad faith claim cannot rest on Farm Bureau’s failure to value Bellville’s damages at a level of $415,000. Cf. Trask v. Iowa Kemper Mut. Ins. Co., 248 N.W.2d 97, 101 (Iowa 1976) (affirming directed verdict for insurer in third-party bad faith case notwithstanding expert testimony that insurer undervalued claim). Certainly there may be cases in which the UIM limits are so low or the undisputed damage items so high that there would be no reasonable basis to refuse payment notwithstanding the impossibility of accurately predicting the value of the insured’s damages. See Williams, 83 F.Supp.2d at 575 (“Refusal to settle may constitute bad faith when the amount in question is clearly known by the insurer.”)- But this case is not one of those.

Given the amounts involved in the case before us, we are convinced the value of the plaintiffs claim was clearly subject to debate. See Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 881 (5th Cir.2004) (granting summary judgment to insurer because there was a bona fide dispute on the value of insured’s claim for pain and suffering); Williams, 83 F.Supp.2d at 575 (holding no bad faith as a matter of law when “[a] large component of the [insured’s] claim involved pain and suffering, loss of life’s pleasures and loss of consortium, all of which reasonable minds could differ in quantifying”); see also Hopper v. Carey, 810 N.E.2d 761, 766 (Ind.Ct.App.2004) (holding when uninsured/under-insured motorist’s liability was disputed, insurer was not acting in bad faith by delaying resolution of insured’s claim pending determination of motorist’s liability); Myers, 696 So.2d at 104 (holding insurer’s action was not arbitrary and capricious as a matter of law in offering less than $30,000 to insured, whose damages were ultimately determined to be over $550,000, where “medical evidence [was] extremely conflicting as to the causation and duration of [insured’s] injuries”). An insurance company simply cannot be expected, at its peril, to predict the exact amount a jury will award. See Classic Imports, Inc. v. Singleton, 702 So.2d 1187, 1194 (La.Ct.App.1997); cf. Ferris v. Employers Mut. Cas. Co., 255 Iowa 511, 521, 122 N.W.2d 263, 269 (1963) (refusing, in third-party bad faith action, to judge insurer’s pre-suit evaluation of liability “by the final outcome, by a jury’s decision”); see also Galbraith v. Allied Mut. Ins. Co., 698 N.W.2d 325, 328 (Iowa 2005) (stating claim is fairly debatable even though verdict could be in excess of UIM limits if verdict could also have been so low as to not implicate UIM limits). For these reasons, the plaintiffs entitlement to damages from Schueler in an amount that would warrant a $270,000 payment under the UIM coverage was fairly debatable. Therefore, we hold as a matter of law that Farm Bureau cannot be held liable for bad faith in failing to meet the plaintiffs settlement demand.

IV. Refusal to Consent to Insured’s Settlement with Tortfeasor.

The jury also predicated its bad faith finding on Farm Bureau’s refusal to consent to Bellville’s settlement with the underinsured motorist. Farm Bureau argues on appeal that its denial of consent was objectively reasonable because a UIM carrier has no duty to consent to its insured’s settlement with the alleged tortfea-sor. It contends alternatively that even if it is wrong in this assertion, the existence of a duty to consent was fairly debatable. The plaintiff responds that an insurer does have a duty to consent to settlement, and Farm Bureau should have known it had such a duty.

A three-judge panel of the court of appeals held that Farm Bureau had no specific duty to consent to a reasonable settlement, only a general duty of good faith. The court further concluded Bellville had “faded as a matter of law to show any underlying breach of an implied duty of good faith” relating to Farm Bureau’s failure to consent.

A. Existence of duty to consent. Farm Bureau’s UIM coverage included the following provision: “There is no coverage ... for any insured who, without our consent, settles with any person or organization who may be liable for bodily injury.” This clause imposes a duty on the insured to obtain the insurer’s consent prior to any settlement with the tortfeasor. Grinnell Mut. Reins. Co. v. Recker, 561 N.W.2d 63, 68 (Iowa 1997). Our court has held that such clauses are permissible under Iowa law as a means to protect the insurer’s subrogation rights against the responsible party. Kapadia v. Preferred Risk Mut. Ins. Co., 418 N.W.2d 848, 851 (Iowa 1988). In recognition of this limited purpose, we have held that an insured’s failure to obtain the insurer’s consent to settlement will preclude payment of UIM benefits only if the insurer “proves that, absent such a breach, it could have collected from the tort-feasor.” Id. at 852. Furthermore, the insured’s entitlement to UIM benefits will be reduced only by the amount of the subrogation recovery lost by the insurance company. Hoth v. Iowa Mut. Ins. Co., 577 N.W.2d 390, 393 (Iowa 1998). We have placed the burden of proving prejudice on the insurer: “The insurer must establish not only that the claim has been released but also that it was collectible and establish within a reasonable approximation the dollar amount that might be collected.” Id.

Farm Bureau argues it had no implied duty to consent because under Iowa case law an insured can settle prior to obtaining the insurer’s consent without necessarily forfeiting all benefits under the policy; recovery of benefits is reduced only by the amount otherwise collectible from the party liable. Thus, it asserts, if an insured is confident that the tortfeasor has no collectible assets, as Bellville was here, then no harm will result from the insured’s settlement without consent. In response, the plaintiff contends there is harm to the insured if the UIM carrier has no duty to consent. He claims that realistically no insured would settle with a tortfeasor without the UIM carrier’s consent for fear of losing all or some portion of the UIM benefits.

We think the plaintiff has the better argument. Although the eonsent-to-settlement clause places a duty on the insured, the obtaining of consent also bestows a benefit on the insured by facilitating the insured’s settlement with the tortfeasor. Recognition of a duty to consent is also more consistent with our case law on the effect of the consent-to-settlement clause and its breach. The practical result of holding that an insurer has no good faith duty to consent is to shift to the insured the responsibility of ascertaining and evaluating the tortfeasor’s ability to contribute toward payment of the insured’s damages. This result is contrary to current case law under which the insurer bears the burden to establish that its subrogation rights have been harmed by a settlement to which it did not consent. If the insurer has a good faith duty to consent to settlement, it will have to make a determination up-front on the viability of its subrogation claim. If it has a reasonable basis to believe its claim has value, then it may refuse to give consent without being exposed to liability for extracontractual damages. But if the insurer has no reasonable basis to think that it can recover from the tortfeasor personally, then it must give consent to its insured’s settlement with and release of the tortfeasor. For these reasons, we hold the consent-to-settlement clause not only imposes an express duty on the insured to obtain the insurer’s consent to settlement but also imposes an implied reciprocal duty on the insurer to consent unless it has a reasonable basis for refusing to do so. Cf. Brunet v. Am. Ins. Co., 660 F.Supp. 843, 846 (D.Vt.1987) (holding duty of good faith requires insurer to consent to insured’s settlement with tortfeasor “if the settlement is within the best interests of both insurer and insured”); Pickering v. Am. Employers Ins. Co., 109 R.I. 143, 282 A.2d 584, 591 (1971) (stating consent-to-settlement clause “carries with it an implied promise by the insurer that its consent will not be arbitrarily or unreasonably withheld”).

Of course, the mere fact that Farm Bureau was wrong in concluding it had no duty to consent to settlement does not mean it was in bad faith. See Bad Faith Actions § 5:07, at 5-26; cf. Kohlstedt v. Farm Bureau Mut. Ins. Co., 258 Iowa 337, 347, 139 N.W.2d 184, 190 (1965) (“A mere mistake in judgment is not enough to show bad faith.”). Nor does the fact that Farm Bureau took a position on this issue that was contrary to its insured necessarily subject it to liability. An insurer’s duty of good faith does not require it to take a position favorable to its insured on an unsettled question of law. See Bad Faith Actions § 5:07, at 5-26 to 5-30. The determinative question is whether its position was reasonable, and that matter turns on whether the existence of a good faith duty to consent was fairly debatable. We now address that issue.

B. Whether existence of duty to consent was fairly debatable. There are several factors that indicate Farm Bureau had a reasonable basis to assert it had no duty to consent to its insured’s settlement. First, whether a UIM insurer has a good faith duty to consent had not been decided by an Iowa appellate court. See Colonial Penn Ins. Co. v. First Ins. Co. of Haw., Ltd., 71 Haw. 42, 780 P.2d 1112, 1114 (1989) (affirming summary judgment for insurer on bad faith claim when coverage issue “was an open question of law”); CUNA Mut. Ins. Soc’y v. Norman, 237 Va. 33, 375 S.E.2d 724, 727 (1989) (finding no bad faith, in part, based on fact that “issue was a matter of first impression in ths jurisdiction”); 14 Couch on Insurance 3d § 207:4, at 207-17 (stating disputed point of law provides reasonable basis for denial of policy claim where issue is one of first impression); Barker & Glad Article, 30 Tort & Ins. L.J. at 86 (“Many courts have found insurer legal positions reasonable, even in the absence of clear supporting authority, because the issue was an open one or one of first impression in the controlling jurisdiction.”). Moreover, whether such a duty should be implied is a question upon which reasonable minds could differ, as evidenced by the court of appeals’ ruling in this case. See Barker & Glad Article, 30 Tort & Ins. L.J. at 83 (stating “the most reliable method of establishing that the insurer’s legal position is reasonable is to show that some judge in the relevant jurisdiction has accepted it as correct”). Thus, we conclude the question of whether an insurer had a good faith duty to consent was fairly debatable as a matter of law.

C. Summary. A UIM insurer has a good faith duty to consent to its insured’s settlement with the tortfeasor when there is no reasonable basis to believe the tort-feasor has any assets or other ability to contribute toward satisfaction of the insurer’s subrogation rights. For purposes of the present case, however, this duty was not so evident that Farm Bureau could not fairly debate whether such a duty existed. Therefore, Farm Bureau had a reasonable basis to refuse to consent to Bellville’s proposed settlement with Schueler. Consequently, the defendant’s refusal to consent cannot support the jury’s verdict finding the defendant in bad faith.

V. Conclusion and Disposition.

The extent of the tortfeasor’s liability for Bellville’s damages and the value of those damages were fairly debatable as a matter of law. Therefore, Farm Bureau’s refusal to pay the plaintiffs settlement demand for UIM benefits was not made in bad faith. In addition, although Farm Bureau was wrong in concluding an insurer has no good faith duty to consent to its insured’s settlement with the tortfeasor, this issue was fairly debatable. Consequently, Farm Bureau was not in bad faith for refusing to give consent to Bellville’s proposed settlement with Schueler.

Because the plaintiffs claims of bad faith have no merit as a matter of law, the trial court erred in failing to direct a verdict in favor of the defendant. As this conclusion requires reversal of the judgment in favor of the plaintiff for both compensatory and punitive damages, we need not address the evidentiary issues raised by Farm Bureau or its challenge to the punitive damage award. Accordingly, we reverse the judgment in favor of the plaintiff and remand for entry of judgment for the defendant.

DECISION OF COURT OF APPEALS VACATED. DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.

All justices concur except LARSON, J., who takes no part.

      . Farm Bureau's policy provided that it would “pay for bodily injury an insured is legally entitled to recover from the owner or operator of an under-insured motor vehicle.” (Emphasis added and original emphasis omitted.)

      . We ignore the nominal sum for interest on burial expense, as it appears from the record that this factor did not play a role in the parties' respective valuations of the damage claims.

      . The sum of $415,000 was calculated as follows. There are three known factors affecting Farm Bureau’s assessment of its liability. As the plaintiff concedes, Farm Bureau would have been entitled to reduce the plaintiff's total damages by $50,000 for the payment made by Schueler’s liability insurer. In addition, as we have already discussed, Farm Bureau had a reasonable basis to deduct 30% from the damages sustained by Bellville individually to account for his comparative fault. Finally, the highest value Farm Bureau could have been expected to place on the economic damages is $250,000, meaning the balance of any total damage figure must be attributed to loss of consortium, a component subject to reduction for Bellville's comparative fault. Thus, the calculation of damages required to warrant a UIM payment of $270,000 is: $415,000 (consisting of $100,000 loss of earnings, $150,000 loss of support, and $165,000 loss of consortium) minus $94,500 (30% fault on Bellville's damages) minus $50,000 (tort-feasor payment) equals $270,500.

      . The chilling effect on settlement of the UIM insurer's refusal of consent is now even more likely in light of our recent decision in Allied Mutual Insurance Co. v. Heiken, 675 N.W.2d 820 (Iowa 2004). We held in Heiken that a tortfeasor who knows of an insurer's subrogation rights remains liable to the insurer notwithstanding a release from the injured insured if the tortfeasor knows the insurer has not consented to the settlement. 675 N.W.2d at 830. A tortfeasor with knowledge of an insurer's subrogation interest, even when contingent, may be disinclined to settle with the injured party, knowing that the subrogation claim of the nonconsenting insurer remains viable.

      . The other option available to an insurer who is reluctant to consent to its insured's settlement with the tortfeasor is to tender the amount of the proposed settlement to the insured and substitute its payment for that of the tortfeasor, thereby becoming fully subro-gated to any recovery from the tortfeasor. See Recker, 561 N.W.2d at 70. Although we are asked to make this option mandatory, we decline to do so. There is simply no provision in the policy from which such an obligation can be implied. If such an extracon-tractual duty is to be imposed upon insurers, the legislature is most suited to make that policy decision, as well as to specify the framework for such a procedure.