RILEY, J.
Inman raises one issue on appeal, which we restate as follows: Whether the trial court erred in denying her motion for prejudgment interest.
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The Tort Prejudgment Interest Statute (the TPIS) permits a trial court to award prejudgment interest to a party that prevails at trial in “any civil action arising out of tortious conduct” so long as that party has made a timely offer of settlement according to terms specified in the statute. I.C. § 34-51-4-1, -5, and -6. These terms require the Plaintiff to make a settlement offer within one year after the claim is filed in court, and include a provision for payment of the offer within sixty days after the offer is accepted. I.C. § 34-51-4-6. In addition, the amount of the offer must not exceed one and one-third of the amount of the judgment awarded. Id. The statute limits the rate of prejudgment interest that a trial court may award to a minimum of six percent and a maximum of ten percent per year. See I.C. § 34-51-4-9. The court is further limited to awarding interest for a maximum period of forty-eight months. I.C. § 34-51-4-8.
The purpose of the TPIS is to encourage settlement and to compensate the plaintiff for the lost time value of money. Johnson v. Eldridge, 799 N.E.2d 29, 33 (Ind. Ct. App. 2003), trans. denied. If a defendant has the option to terminate the dispute at a known dollar cost, and chooses not to do so, that defendant, and not the plaintiff, should bear the cost of the time value of money in the intervening period if the ultimate result is within the parameters set by the legislature. Id.
We evaluate an award of prejudgment interest under an abuse of discretion standard. Id. The decision to award prejudgment interest rests on a factual determination, and this court may only consider the evidence most favorable to the judgment. Id. An abuse of discretion occurs when the trial court’s decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misrepresented the law. Id.
Here, Inman argues that the trial court should have granted her motion and awarded her prejudgment interest because she met all of the requirements of the TPIS. State Farm responds that Inman does not meet the statutory requirements because an underinsured motorist claim arises out of a contract and is not a civil action arising out of tortious conduct as required by the statute. State Farm also argues that it is not liable for any amount beyond the $100,000 policy limit. We address each of these contentions in turn.
II. Civil Action Arising Out of Tortious Conduct
State Farm first responds that Inman does not meet the TPIS requirements because an underinsured motorist claim is not a civil action arising out of tortious conduct as required by the statute. . . . .
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We find the reasoning of these cases [from other jurisdictions], as well as similar ones in other jurisdictions, to be persuasive. . . . We therefore hold that a claim against one’s insurer for underinsured motorist benefits is a civil action arising out of tortious conduct, and the award of prejudgment interest pursuant to Indiana Code section 34-51-4-5 in such a case is appropriate.
III. Prejudgment Interest in Excess of the Policy Limits
State Farm also responds that prejudgment interest is not appropriate in this case because Inman has already reached the $100,000 limit on her policy, and an award of prejudgment interest would improperly exceed the policy limit. . . . .
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Again, we find the reasoning of these cases, as well as similar ones, to be persuasive. . . . .
Here, based upon the purpose of the TPIS as well as the public policy considerations as already stated in Denham, we hold that an insurer can be required to pay prejudgment interest in excess of uninsured and/or underinsured motorist limits in an action brought by an insured for failure to pay uninsured and/or underinsured motorist coverage. Our holding today is consistent with the United States Northern District of Indiana Court’s decision in Schimizzi v. Illinois Farmers Insurance Company, 928 F.Supp. 760 (N.D. Ind. 1996), which awarded Schimizzi $250,000, her uninsured motorist policy limit, as well as $46,799.20 in prejudgment interest.
This holding is also consistent with the Indiana supreme court’s treatment of prejudgment interest in medical malpractice cases where that court has held that a qualified health care provider is responsible for the collateral litigation expense of prejudgment interest even if the expense brings the provider’s total liability over the cap. Cahoon v. Cummings, 734 N.E.2d 535, 547 (Ind. 2000). The rationale for this treatment is the same rationale set forth in other civil actions arising out of tortious conduct. Specifically, in Cahoon, the Indiana supreme court explained that if the defendant has the option to terminate the dispute at a known dollar cost, and chooses not to do so, that defendant and not the plaintiff should bear the cost of the time value of money in the intervening period if the ultimate result is within the parameters set by the legislature. Id.
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Based upon the foregoing, we conclude that the trial court erred in denying Inman’s motion for prejudgment interest pursuant to Indiana Code section 34-51-4-5.
ROBB, J., and BROWN J., concur.