Ill. Court Overturns Decision That Expanded Insurer Liability

The Illinois’ Appellate Court has reversed a lower court ruling that allowed a plaintiff to collect on underinsured motorist coverage even though a policy option that offered the coverage had been rejected.

The case, according to a report from the National Association of Independent Insurers, involved the death of Tak Kwon Lee, a delivery truck driver for John Deere, who was killed in an accident by a driver that was underinsured. Lee’s estate sought underinsured motorist coverage through his employer’s insurer, the John Deere Insurance Company. Deere offered to pay the policy limit of $40,000, but the estate rejected the offer and filed suit asking the court to increase the coverage to the liability limit of $1 million.

The trial court ruled in favor of Lee, finding that Deere’s use of a separate form to reject an increase in underinsured motorist coverage violated the Illinois Insurance Code. The appellate court opinion, which the NAII supported by filing an amicus brief, ruled that the trial court misapplied the law in granting summary judgment in favor of Lee.

“The appellate court correctly ruled that clear and unambiguous statutory language must be enforced,” Monika McGuire, assistant general counsel – Legal Services for NAII, said. “Deere followed the law and used forms that were approved by the Illinois Department of Insurance.”

She added that, “Had the lower court’s ruling been allowed to stand, insurers would have been forced to pay for coverage that had been rejected by the policyholder. Decisions properly made between the policyholder and insurer would be superseded by the desires of the court. This expansion of an insurer’s liability beyond the terms of the contract would have ultimately increased the cost of insurance for all consumers.”