I have some familiarity with insurance companines. I can't imagine the above scenario happening in Washington. First off, the family could sue Progressive directly to recover under a UM policy. In Washington, UM insurance is a contract directly between the policy holder and the company. Second, the family could offer to settle for policy limits and be entitled to any judgment, even one over policy limits, if Progressive opted not to settle. This puts a lot of pressure on insurance companies to settle or pay claims. Third, the family could chase after Progressive for bad faith and likely recover attorneys fees and treble damages for wrongful denial or poor investigation of the facts. They would be much more likely to win these damages if they prevailed in court on the underlying claims. Laws must be different in Maryland but Washington does a good job of protecting individual policy holders. There is a fair argument that Washington does too good of a job protecting policy holders and everyone pays more for it.