After someone is involved in an Illinois car accident, insurance coverage for bodily injury liability may be insufficient to cover the actual damages suffered by an accident victim. Because many accidents result in damages in excess of the at-fault party’s insurance coverage, Illinois drivers are required to carry underinsured motorist bodily injury coverage to protect themselves and their passengers in the event of such an accident. A recent decision by the Appellate Court of Illinois demonstrates that insurance companies may dispute paying out damages claimed by a client under an underinsured motorist provision.
According to the court’s opinion, the plaintiff was injured in two car accidents and suffered $44,000 in damages, which exceeded the $40,000 in total coverage from the other drivers’ insurance policies. The plaintiff made underinsured motorist claims with his own insurance company for the amount of medical damages he suffered from the accidents, and was awarded $44,000 at arbitration. Thus, the plaintiff would collect the $44,000 from his insurance company in addition to the $40,000 he had already collected from the at-fault drivers’ insurance companies. The plaintiff’s insurance company appealed this decision to state court, claiming that the plaintiff would collect nearly double the amount he was entitled to under relevant state law. The trial court agreed, reversing the arbitration award.
After the plaintiff appealed, the higher court also ruled in favor of the defendant. The court found that an insurance company is allowed to “set off” the amount that the plaintiff actually received from the at-fault drivers’ insurance companies before applying their own underinsured motorist coverage to compensate the plaintiff for the unpaid amount of damages resulting from the accidents. The court reasoned that underinsured motorist coverage is designed to fill the gap between an at-fault driver’s coverage and the damages actually suffered, so that the insured would be in the same position as if the other driver had sufficient coverage for all the damages. Under the court’s ruling, the defendant was allowed to set off the $40,000 already paid to the plaintiff, and only needed to pay $4,000 in underinsured motorist benefits to the plaintiff.