Illinois Appellate Court Reverses Summary Judgment for Insurer in Dispute about Interpretation of Underinsured Motorist Policy

If you are involved in an auto accident, you are probably wondering how your insurance policy works and whether you will receive coverage from your insurer and any other insurers involved in the crash. In addition to pursuing a civil claim for damages from the person who caused your injuries, you can file an insurance claim to seek coverage benefits. This may sound straightforward, but insurance companies are notorious for hiding the ball and being unfair to insureds. At Therman Law Offices, we are available to assist you with all aspects of your Chicago car accident including ensuring that you receive the insurance coverage that you deserve in a timely fashion.

Recently, the Illinois Court of Appeal considered a case in which the plaintiff filed a declaratory judgment action asking the court to interpret an auto insurance policy that was issued to her and in effect at the time she was involved in an accident with an underinsured motorist. The total damages that the plaintiff suffered as a result of the accident was $250,000. The driver of the vehicle that caused the crash had a policy with a limit of $100,000. It paid this limit to the plaintiff without contest or litigation. The plaintiff then filed a claim with her own insurer for payment of underinsured motorist benefits. The limit for her Underinsured Motorist (UIM) policy was $250,000 as well as medical payments of $100,000. Her insurer paid the full medical payments coverage limit.

Next, the plaintiff’s insurer offset the $100,000 that the at-fault driver’s insurer paid from its $250,000 UIM limit and offset the $100,000 of medical payments it provided to the payment. It provided her with a check for $50,000. The plaintiff declined the check on the basis that it had no right to offset the medical payments against her total damages rather than the limits of liability. The parties both filed motions for summary judgment in the plaintiff’s declaratory judgment action and the court ruled in favor of the insurer. The plaintiff argued that the insurer improperly set off the medical payment benefits that it paid to her against the $250,000 UIM policy limit rather than her total damages of $350,000. The plaintiff appealed.

On review, the appellate court concluded that portions of the plaintiff’s auto insurance policy were ambiguous regarding the meaning of the term damages. It also concluded that the policy contained a conflict between its provisions on medical payment reductions and other portions of the UIM policy. This creates an ambiguity and under Illinois law, the ambiguity is always resolved in favor of the insured. Ultimately, the court concluded that the medical payment benefits are deductible from the plaintiff’s damages and not the UIM policy. As a result, it reversed the court’s entry of summary judgment in the defendant’s favor on this issue and remanded the action.

If you or someone you love has been injured due to another person’s careless driving, the seasoned Chicago car accident lawyers at Therman Law Offices are available to assist you. We offer a free consultation to discuss your situation including the applicability of any insurance policies to your damages. To schedule your free and confidential appointment, call us at 773-545-8849 or contact us online to get started.

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