Illinois Appellate Court Reverses Cook County Circuit Court on Underinsured Motorist Compensation Case

On Aug. 10, 2009, Dolores Trujillo was a passenger in a vehicle driven by Adam Delgado.The Delgado vehicle was involved in a collision.  Allstate Property and Casualty Insurance insured Delgado and his car.  The other car involved in the collision was insured by American Access Insurance Co.

Trujillo settled her claim against American Access for $20,000, which was the policy limit, and then settled her claim against Delgado for the $100,000 insurance policy limit on his Allstate policy. 

Trujillo also claimed $80,000 from Allstate as under-insured motorist coverage. The $80,000 represented the difference between Allstate’s maximum under-insured coverage $100,000 and the $20,000 she received from American Access.

Allstate argued that the limit of its underinsured motorist coverage was reduced to zero when Trujillo settled her case for $100,000 on Delgado’s behalf.  The Allstate policy provided insurance for bodily injury for $100,000 per person and $300,000 per occurrence. 

Allstate filed a declaratory judgment action stating that the $100,000 was a hard limit on the amount Trujillo could receive, regardless if part of the award was in under-insured motorist payments and part was from the bodily injury.

Trujillo maintained that Allstate was attempting to reduce its under-insurance motorist coverage limit, which was required by Illinois law. 

Trujillo argued that allowing Allstate to reduce its under-insured motorist coverage would be against public policy.Trujillo contended that that would be the case even if the policy was clear in the insurance contract that it should be considered illegal and void to make that limitation.

Allstate argued that its reduction of under-insured motorist coverage was supported by Illinois law. Allstate acknowledged that no Illinois court has recognized or directly addressed this issue. Both parties moved for summary judgment. The circuit court judge found in favor of Allstate, and Trujillo appealed.

The appellate court began by noting, “Generally, when the language of a policy is clear and unambiguous, a reviewing court will give effect to those terms.” Although the parties agreed that Allstate’s policy language was unambiguous, Trujillo argued that Allstate’s reduction of coverage for uninsured motorists violated public policy.

In this case, the vehicle that was insured by American Access was under insured because the liability limit was well under the limit of under-insured motorist coverage provided by Allstate. Trujillo does not dispute that her recovery from Allstate should be reduced by the $20,000 she received from American Access.  But Trujillo questioned whether it should be reduced by the payment of bodily injury benefits.  Because of this $20,000 offset, there is no danger of Trujillo “double-dipping” by collecting on two insurance policies.

The Illinois Supreme Court in another case ruled that the purpose of the uninsured motorist coverage was to place the individual in the position they would be in if both policyholders had sufficient coverage.  This appellate court cited precedent and made a point of stating that neither of the parties in this appeal had made reference to that Illinois Supreme Court ruling.

In this case, Trujillo would have recovered against both Delgado and the other driver, meaning that Allstate’s set-off would violate the public policy goal of the law.  The court here distinguished this outcome from the potentially impermissible stacking of uninsured motorist coverage with under-insured motorist coverage.

Trujillo is, in theory, recovering from two individuals, and payments on behalf of Delgado does not affect the amount the other driver owed Trujillo.  The appellate court determined that Allstate’s interpretation was against public policy and so that aspect of the contract was rendered void.  The appellate court reversed the circuit court’s ruling and granted judgment in favor of Trujillo sending the case back for the assignment of a specific amount consistent with Trujillo’s damages.

Allstate Property and Casualty Insurance Company v. Dolores Trujillo, 2013 IL App (1st) 123419-U (December 20, 2013).

Kreisman Law Offices has been successfully handling car accident cases, under-insured motorist claims, uninsured motorist claims, truck accidents and bicycle accidents for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Mount Prospect, Evergreen Park, Park Ridge, Prospect Heights, Palatine, Villa Park, Oakbrook, Clarendon Hills, Bedford Park, Oak Park, Calumet Park, Forest Park, Orland Park, Palos Park, River Grove and Skokie, Ill.

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