Thounsavath v. State Farm Mutual Automobile Insurance Company

2018 IL 122558IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 122558)
PHOUNGEUN THOUNSAVATH, Appellee, v. STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY, Appellant.
Opinion filed March 22, 2018.
JUSTICE THOMAS delivered the judgment of the court, with opinion.
Chief Justice Karmeier and Justices Freeman, Kilbride, Garman, Burke, and
Theis concurred in the judgment and opinion.
OPINION
¶1 Plaintiff Phoungeun Thounsavath sought underinsured motorist coverage from
defendant, State Farm Mutual Automobile Insurance Company (State Farm),
stemming from an automobile accident that occurred while she was a passenger in a
vehicle driven by Clinton Evans. State Farm denied plaintiff’s claim for
underinsured motorist coverage based upon a driver exclusion endorsement in
plaintiff’s automobile liability insurance policies with State Farm. The driver
exclusion endorsement named Clinton Evans as an excluded driver.
¶2 Both parties filed complaints for declaratory judgment. On cross-motions for
summary judgment, the trial court granted summary judgment in favor of plaintiff.
The appellate court affirmed. 2017 IL App (1st) 161334. This court allowed State
Farm’s petition for leave to appeal. Ill. S. Ct. R. 315 (eff. July 1, 2017).
¶3 BACKGROUND
¶4 State Farm issued two policies of motor vehicle insurance to plaintiff. One
policy insured a 1998 Pontiac Grand Am, and one policy insured a 2004 Pontiac
GTO. Each policy provided liability, uninsured motorist, and underinsured
motorist coverage in the amounts of $100,000 per person and $300,000 per
accident. Both policies contained a “Driver Exclusion Endorsement” that excluded
Clinton M. Evans. Driver exclusion endorsements are also referred to as named
driver exclusions. Specifically, the driver exclusion endorsement provided:
“IT IS AGREED WE SHALL NOT BE LIABLE AND NO LIABILITY OR
OBLIGATION OF ANY KIND SHALL ATTACH TO US FOR BODILY
INJURY, LOSS OR DAMAGE UNDER ANY OF THE COVERAGES OF
THIS POLICY WHILE ANY MOTOR VEHICLE IS OPERATED BY:
CLINTON M. EVANS.” (Emphases in original.)
¶5 On June 17, 2012, plaintiff was a passenger in a 2007 Hyundai automobile that
was owned and operated by Clinton Evans when Evans’s vehicle was involved in
an accident with another automobile. Plaintiff was injured in the accident. Plaintiff
made a claim for damages against Clinton Evans for her personal injuries. Evans’s
insurer, American Access Insurance Company, paid plaintiff’s claim in the amount
of $20,000, the policy limit. Plaintiff then filed a claim for underinsured motorist
coverage with State Farm for the June 17, 2012, accident. State Farm denied
plaintiff’s claim based upon the driver exclusion endorsement.
¶6 Plaintiff subsequently filed a complaint for declaratory judgment in the circuit
court of Cook County, seeking a declaration that she was entitled to underinsured
motorist coverage under her State Farm policies. Plaintiff alleged that she
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purchased automobile insurance policies from State Farm that included
underinsured motor vehicle coverage for bodily injury. Plaintiff noted that she was
involved in a motor vehicle accident while a passenger in a vehicle owned by
Clinton Evans and sustained over $30,000 in medical bills related to the accident.
Clinton Evans was at fault for the accident, and his insurer tendered the full policy
limits of $20,000 to plaintiff. Plaintiff then sought to recover pursuant to the
underinsured motorist coverage of her State Farm policies, but State Farm denied
the claim, citing the named driver exclusion stating that Clinton Evans was an
excluded driver. Plaintiff asserted that section 143a-2 of the Illinois Insurance Code
(215 ILCS 5/143a-2 (West 2012)) required all policies of insurance to provide
underinsured motorist coverage to the named insured, so that State Farm’s denial of
plaintiff’s underinsured motorist coverage violated the statute, as well as Illinois
public policy. Plaintiff therefore sought a declaration that State Farm must provide
her with underinsured motorist coverage under her State Farm policies.
¶7 State Farm filed an answer to plaintiff’s complaint for declaratory judgment,
denying that section 143a-2 of the Insurance Code required all policies of insurance
to provide underinsured motorist coverage to the named insured. State Farm also
filed a counterclaim for declaratory judgment, noting that it had issued two policies
of automobile insurance to plaintiff. Both policies contained a driver exclusion
endorsement, signed by plaintiff, which excluded coverage for bodily injury, loss,
or damage under the policies while any motor vehicle is operated by Clinton Evans.
State Farm denied that either of plaintiff’s automobile insurance policies provided
underinsured motorist coverage for the June 17, 2012, accident because all
coverages were excluded while Clinton Evans operated any motor vehicle. State
Farm sought a declaratory judgment in its favor declaring that there was no
underinsured motorist coverage available to plaintiff under either policy for the
June 17, 2012, accident, that State Farm had no duty to arbitrate any claim for
underinsured motorist coverage made by plaintiff under either policy, and that there
was no coverage of any kind available to plaintiff under either policy for the
accident of June 17, 2012.
¶8 The circuit court ordered both parties to file cross-motions for summary
judgment. State Farm filed a motion for summary judgment, arguing that the driver
exclusion endorsement in both automobile policies issued to plaintiff did not
violate the Insurance Code or the public policy of the state of Illinois. The circuit
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court denied State Farm’s motion for summary judgment. Plaintiff then filed her
motion for summary judgment, which the circuit court granted.
¶9 State Farm appealed, arguing that its driver exclusion endorsement did not
violate section 143a-2 of the Insurance Code or Illinois public policy. The appellate
court affirmed the circuit court. 2017 IL App (1st) 161334.
¶ 10 The appellate court noted that, under section 7-601(a) of the Illinois Safety and
Family Financial Responsibility Law (Financial Responsibility Law) (625 ILCS
5/7-601(a) (West 2012)), a part of the Illinois Vehicle Code (Vehicle Code), no one
may operate a motor vehicle or allow a vehicle to be operated without obtaining
sufficient insurance. 2017 IL App (1st) 161334, ¶ 16. In addition, sections 143a and
143a-2 of the Insurance Code (215 ILCS 5/143a, 143a-2 (West 2012)) require
automobile liability insurance policies to include uninsured and underinsured
motorist coverage. 2017 IL App (1st) 161334, ¶ 17. The appellate court
acknowledged that, in general, named driver exclusions in automobile liability
insurance policies are permitted in Illinois. Id. ¶ 22. However, the cases cited by
State Farm in support of its named driver exclusion were distinguishable, as the
named driver exclusions in those cases were enforced as to parties other than the
named insured. Id. ¶ 23.
¶ 11 The appellate court stated that the issue in this case was whether the named
driver exclusion violated Illinois’s mandatory insurance requirements and public
policy where the exclusion barred coverage for the named insured. Although none
of the cases cited by either party addressed that precise issue, the appellate court
found the analysis in American Access Casualty Co. v. Reyes, 2013 IL 115601, to
be instructive.
¶ 12 The issue in Reyes was whether an automobile liability policy could exclude the
only named insured and owner of the vehicle without violating public policy. Reyes
noted that the plain and unambiguous language of section 7-317(b)(2) of the
Vehicle Code (625 ILCS 5/7-317(b)(2) (West 2010)) mandated that an automobile
liability policy cover the “person named therein.” Reyes, 2013 IL 115601, ¶ 11.
Because Reyes was the only person “named therein,” Reyes could not be excluded
from coverage through a contractual provision. Id.-4­
¶ 13 Similar to Reyes, the appellate court held that a named driver exclusion in an
insured’s automobile liability insurance policy that bars liability, uninsured, or
underinsured coverage for the named insured violates Illinois’s mandatory
insurance requirements and Illinois public policy. 2017 IL App (1st) 161334, ¶ 34.
Accordingly, the appellate court held that the named driver exclusion endorsements
in plaintiff’s automobile liability policies with State Farm were not enforceable
against plaintiff, the named insured.
¶ 14 ANALYSIS
¶ 15 As noted, this case was decided based upon the parties’ motions for summary
judgment. Summary judgment motions are governed by section 2-1005 of the Code
of Civil Procedure (735 ILCS 5/2-1005 (West 2012)). Pursuant to section 2-1005,
summary judgment should be granted only where the pleadings, depositions,
admissions, and affidavits on file, when viewed in the light most favorable to the
nonmoving party, show that there is no genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law. Id. The construction of the
terms of an insurance policy and whether the insurance policy comports with
statutory requirements present questions of law that are properly decided on a
motion for summary judgment. Schultz v. Illinois Farmers Insurance Co., 237 Ill.
2d 391, 399 (2010).
¶ 16 The granting of a summary judgment motion is subject to de novo review. Id. at
399-400. In addition, the determination of whether a provision in a contract,
insurance policy, or other agreement is invalid because it violates public policy also
presents a question of law, which is reviewed de novo. Phoenix Insurance Co. v.
Rosen, 242 Ill. 2d 48, 54 (2011).
¶ 17 An insurance policy is a contract, so the rules applicable to contract
interpretation govern the interpretation of an insurance policy. Founders Insurance
Co. v. Munoz, 237 Ill. 2d 424, 433 (2010). A court’s primary function is to ascertain
and give effect to the intention of the parties, as expressed in the policy language.
Id. If the insurance policy terms are clear and unambiguous, they must be enforced
as written, unless doing so would violate public policy. Schultz, 237 Ill. 2d at 400.
The public policy of this state is reflected in its constitution, statutes, and judicial
decisions. Id. If the terms of an insurance contract conflict with a statute, those
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terms are void and unenforceable. Id. Terms of an insurance policy also cannot
circumvent the underlying purpose of a statute in force at the time the policy is
issued. Id.¶ 18 With some exceptions not at issue in this case, section 7-601(a) of the Financial
Responsibility Law requires liability insurance coverage for all motor vehicles
designed to be used on a public highway. 625 ILCS 5/7-601(a) (West 2012). The
liability insurance policy must provide certain minimum liability amounts. Those
amounts, both currently and at the time of the accident at issue in this case, are
$20,000 for bodily injury or death to one person as a result of any one accident,
$40,000 for bodily injury or death of all persons as a result of any one accident, and
$15,000 for damage to the property of others as the result of any one accident. See
Id. §§ 7-203, 7-317(b)(3). The liability insurance policy must also comply with
specific coverage requirements, insuring not only the persons named in the policy
but also “any other person using or responsible for the use” of the subject vehicle
with the express or implied permission of the insured. Id. § 7-317(b)(2). The main
purpose of the mandatory liability insurance requirement is to protect the public by
securing payment of their damages. Reyes, 2013 IL 115601, ¶ 8.
¶ 19 In addition to motor vehicle liability insurance coverage, the Insurance Code
requires automobile liability insurance policies to also include uninsured motorist
coverage. 215 ILCS 5/143a (West 2012). If the limits for the insured’s liability
coverage exceed the minimum amounts required by law, the uninsured motorist
provisions must provide the same higher coverage amounts unless the excess
amount is specifically rejected by the insured. Id. § 143a-2(1). The uninsured
motorist coverage must extend to all who are insured under the policy’s liability
provisions. Schultz, 237 Ill. 2d at 403.
¶ 20 If the insured’s uninsured motorist coverage limit exceeds the minimum
liability limit required by the Financial Responsibility Law, the policy must also
include underinsured motorist coverage in an amount equal to the uninsured
motorist coverage. 215 ILCS 5/143a-2(4) (West 2012). As with uninsured motorist
coverage, the underinsured motorist coverage must extend to all those who are
insured under the policy’s liability provisions. Schultz, 237 Ill. 2d at 401. In
contrast to the uninsured motorist provision, the underinsured motorist provision
does not include a right of rejection.
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¶ 21 As noted, in this case plaintiff was injured in an automobile accident while a
passenger in Clinton Evans’s automobile. Plaintiff sought to recover underinsured
motorist benefits pursuant to her automobile liability policies with State Farm
because the policy limits in Clinton Evans’s automobile liability insurance policy
were not sufficient to compensate plaintiff for her injuries. As in the lower courts,
State Farm claims that plaintiff is not entitled to recover under her policies because
Clinton Evans was excluded from coverage under the driver exclusion endorsement
in plaintiff’s policies. State Farm argues that named driver exclusions are permitted
in Illinois and that plaintiff knew when she signed the driver exclusion
endorsements in her policies that State Farm would not pay any liability of any
kind, under any coverage, when Clinton Evans operated any automobile.
Accordingly, State Farm maintains that plaintiff is not entitled to recover
underinsured benefits under her policies with State Farm.
¶ 22 State Farm is correct that, in general, named driver exclusions are permitted in
Illinois. Reyes, 2013 IL 115601, ¶ 15. We also agree with State Farm that it was
entitled to identify Clinton Evans as an individual for whom it would not provide
insurance coverage. However, Clinton Evans is not seeking insurance coverage
from State Farm under plaintiff’s policies. It is plaintiff who is attempting to collect
under her policies with State Farm.
¶ 23 In finding that the exclusion in this case was unenforceable against plaintiff, the
appellate court found the Reyes decision to be instructive. State Farm distinguishes
this case from Reyes on the basis that the exclusion in Reyes was directed at the sole
named insured and owner, an exclusion which conflicted with the plain language of
section 7-317(b)(2) of the Financial Responsibility Law. In contrast to Reyes,
plaintiff in this case, the sole named insured and owner, was not excluded from
liability coverage for her operation of any vehicle. State Farm also notes that Reyes
dealt only with liability coverage, while plaintiff’s claim here is for underinsured
motorist coverage. Finally, State Farm observes that Reyes did not hold that a
named driver exclusion per se violates the Financial Responsibility Law.
Accordingly, State Farm argues that the appellate court erred in relying on Reyes to
find the driver exclusion endorsement in this case unenforceable.
¶ 24 State Farm’s focus in distinguishing Reyes is misplaced. The appellate court
discussed Reyes because it found the analysis in Reyes instructive. That analysis
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addressed whether an exclusion directed to a mandatory statutory provision was
enforceable. Whether an exclusion directed to a mandatory statutory provision is
enforceable is also at issue in this case, albeit in the context of underinsured
motorist coverage rather than liability coverage.
¶ 25 The main purpose of the mandatory liability insurance requirement is “to
protect the public by securing payment of their damages.” Progressive Universal
Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121, 129
(2005). To further that end, the legislature requires uninsured motorist coverage to
place the policyholder in substantially the same position he would occupy if the
tortfeasor had the minimum liability insurance required by the Financial
Responsibility Law. Rosen, 242 Ill. 2d at 57. Thus, while mandatory liability
insurance attempts to ensure that all drivers carry at least $20,000 of bodily injury
coverage, mandatory uninsured motorist coverage protects a driver who has
complied with the liability coverage requirement when she is injured by a driver
who has not. Id. at 68. Moreover, the legislative purpose of underinsured motorist
coverage is the same as that of uninsured motorist coverage, which is “ ‘to place the
insured in the same position he would have occupied if the tortfeasor had carried
adequate insurance.’ ” Id. at 57 (quoting Sulser v. Country Mutual Insurance Co.,
147 Ill. 2d 548, 555 (1992)). If the tortfeasor is insured, but for an amount less than
the claimant has bargained for and paid for with her own insurer, mandatory
underinsured motorist coverage in an amount equal to her uninsured motorist
coverage ensures that the claimant will still be compensated up to the limits of her
own uninsured motorist policy. Id. at 69.
¶ 26 Therefore, under Illinois law, liability, uninsured motorist, and underinsured
motorist coverage are “ ‘inextricably linked.’ ” Id. at 58 (quoting Schultz, 237 Ill.
2d at 404). Liability, uninsured motorist, and underinsured motorist coverages all
“serve the same underlying public policy: ensuring adequate compensation for
damages and injuries sustained in motor vehicle accidents.” Id.¶ 27 The court in State Farm Mutual Automobile Insurance Co. v. Villicana, 181 Ill.
2d 436, 444-45 (1998), recognized that “[b]oth the underinsured and uninsured
motor vehicle provisions contemplate that consumers will select the total ‘package’
of coverage, i.e., liability, uninsured and underinsured, in amounts they themselves
deem adequate for their own protection.” (Emphasis in original.) Thus,
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underinsured motorist coverage protects the insured from the risk that a negligent
driver of another vehicle “(i) will cause injury to the insured *** and (ii) will have
inadequate liability coverage to compensate the injuries caused by his or her
negligence.” Id. at 445. Underinsured motorist coverage guarantees the protection
of an injured insured against the possibility that a tortfeasor, over whom the insured
has no control, purchases inadequate amounts of liability coverage. Id.¶ 28 That is exactly the situation in the instant case. Plaintiff purchased liability,
uninsured motorist, and underinsured motorist coverage in an amount she deemed
adequate for her own protection. Plaintiff had no control over the amount of
liability insurance coverage that Clinton Evans purchased for his own vehicle. The
liability insurance coverage that Clinton Evans purchased for his own vehicle was
inadequate, so plaintiff sought the protection of the underinsured motorist coverage
that she purchased from State Farm.
¶ 29 State Farm argues, however, that because plaintiff signed the driver exclusion
endorsement naming Clinton Evans, plaintiff was precluded from recovering
underinsured motorist coverage for an accident where Clinton Evans was the
tortfeasor. State Farm claims that plaintiff was free to make her own contract with
State Farm and chose to sign a contract with a driver exclusion endorsement
naming Clinton Evans. State Farm also argues that plaintiff did have control over
Evans and his decision to purchase minimal liability coverage because plaintiff had
control over her choice to ride as a passenger in Evans’s vehicle or in any vehicle
operated by Evans.
¶ 30 An insurance policy is a contract, but the terms of an insurance contract must
comport with the statutory requirements in effect when the policy is issued. Schultz,
237 Ill. 2d at 408. Insurers have no right to depart from valid statutory requirements
in their policies. Id. Therefore, the fact that plaintiff signed the driver exclusion
endorsement is not dispositive. We must determine whether that exclusion is
consistent with the relevant statutes and underlying purpose of the statutes.
¶ 31 Neither the statute nor the case law places any restriction on the right of the
parties to an insurance contract to agree on which persons are to be the “insureds”
under an automobile insurance policy. Heritage Insurance Co. of America v.
Phelan, 59 Ill. 2d 389, 395 (1974). However, once a person qualifies as an insured
for purposes of the policy’s bodily injury liability provisions, she must be treated as
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an insured for purposes of uninsured and underinsured motorist coverage as well.
Schultz, 237 Ill. 2d at 404. Consequently, just as the governing statutes prohibit an
insurance company from directly or indirectly denying uninsured motorist
coverage to someone who qualifies as an insured for purposes of liability coverage,
the statutes prohibit companies from directly or indirectly denying underinsured
coverage to such a person when the basic liability coverage exceeds the statutory
minimum. Id.¶ 32 In this case, State Farm and plaintiff agreed that Clinton Evans was not an
“insured” under plaintiff’s automobile liability insurance policies. However, the
parties agreed that plaintiff was an insured. Once plaintiff was designated an
“insured” under her policies with State Farm, then, State Farm was prohibited from
either directly or indirectly denying her underinsured motorist coverage.
¶ 33 Section 143a of the Insurance Code is plain and unambiguous in mandating that
each policy must contain the specified uninsured coverage. Squire v. Economy Fire
& Casualty Co., 69 Ill. 2d 167, 176 (1977). Squire recognized that the public policy
of this state concerning uninsured motorist coverage is that no automobile liability
insurance policy shall be issued unless coverage is provided therein against
damages caused by uninsured motorists. Id. The “statutory coverage is mandatory,
and it may not be whittled away by an unduly restrictive definition.” (Internal
quotation marks omitted.) Barnes v. Powell, 49 Ill. 2d 449, 453 (1971). In addition,
section 143a-2 of the Insurance Code is plain and unambiguous in mandating that
where uninsured motorist coverage in a policy exceeds the limits set forth in section
7-203 of the Financial Responsibility Law (625 ILCS 5/7-203 (West 2012)), each
policy must include underinsured motorist coverage in an amount equal to the total
amount of uninsured motorist coverage. 215 ILCS 5/143a-2(4) (West 2012).
¶ 34 In this case, plaintiff and State Farm contracted for liability insurance in the
amounts of $100,000 per person and $300,000 per accident, which exceeded the
minimum statutory limits. Pursuant to section 143a of the Insurance Code, State
Farm was required to include uninsured motorist coverage in those amounts in
plaintiff’s policies unless plaintiff specifically rejected the higher coverage
amounts. Plaintiff did not reject the higher coverage amounts. Accordingly, section
143a-2 required plaintiff’s policies to also include underinsured motorist coverage
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in amounts equal to her uninsured motorist coverage. The uninsured and
underinsured amounts are mandated by statute.
¶ 35 Because the underinsured motorist coverage was mandated by statute, State
Farm’s driver exclusion endorsement could not exclude that coverage through a
contractual provision. Under the facts of this case, application of the driver
exclusion to bar plaintiff, the named insured, from recovering underinsured
motorist coverage pursuant to her policies with State Farm violates section
143a-2(4) and, therefore, public policy.
¶ 36 In so holding, we note that the cases cited by State Farm in support of its
position are distinguishable from the instant case. For example, in Phelan, 59 Ill. 2d
389, the court held that the excluded driver was not an insured under his father’s
policy, so that the excluded driver could not collect uninsured motorist coverage
pursuant to that policy. Phelan would be controlling if it was Evans, the excluded
driver, seeking to recover under plaintiff’s policies with State Farm. Phelan,
however, is inapposite under the facts of this case. Here, it is the named insured,
and not the excluded driver, who is seeking underinsured motorist coverage.
¶ 37 State Farm also relies on Rockford Mutual Insurance Co. v. Economy Fire &
Casualty Co., 217 Ill. App. 3d 181 (1991). In that case, a passenger was killed
while riding in a vehicle driven by an excluded driver. When the insurer of the
vehicle driven by the excluded driver denied coverage for the death of the
passenger based upon the named driver exclusion, the mother of the passenger
sought uninsured motorist benefits pursuant to her own automobile insurance
policy. The mother’s insurer filed a complaint for declaratory judgment, claiming
that, to the extent the named driver exclusion barred uninsured motorist coverage
with respect to the passenger, the exclusion violated the public policy of section
143a and was unenforceable and void. Id. at 183-84.
¶ 38 The appellate court disagreed, noting that if a passenger is injured while riding
in an uninsured vehicle, the passenger must look to his own policy for recovery
under its uninsured motorist provision. Id. at 187. The court explained that it did not
violate public policy to recognize the named driver exclusion endorsement, which
rendered an otherwise insured vehicle uninsured, because the intention and purpose
of section 143a was to provide recovery for insureds under their own uninsured
motorist provisions. Id.
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¶ 39 State Farm cites Rockford Mutual in support of its claim that enforcing its
named driver exclusion does not violate the public policy of section 143a-2.
Rockford Mutual, however, actually supports plaintiff’s position in this case. As
discussed, Rockford Mutual held that if a passenger is injured while riding in an
uninsured vehicle, the passenger must look to his own policy for recovery under its
uninsured motorist provision. Id. Like section 143a concerning uninsured motorist
coverage, the intention and purpose of section 143a-2 is to provide recovery for
insureds under their own underinsured motorist provisions. Here, plaintiff was
injured while a passenger in a vehicle that was underinsured. Plaintiff therefore
sought recovery under her own policy under its underinsured motorist provision.
¶ 40 State Farm also claims that the decisions in Villicana, 181 Ill. 2d 436, and
Fuoss v. Auto Owners (Mutual) Insurance Co., 118 Ill. 2d 430 (1987), support its
argument that policy exclusions do not become unenforceable merely because the
named insured is the person seeking the coverage. Those decisions, however, also
are inapposite.
¶ 41 In Villicana, the insured had two separate policies insuring two vehicles, one of
which had higher policy limits than the other. The insured’s daughter was injured
while riding as a passenger in the vehicle insured with lower limits. Because the
damages incurred by the insured’s daughter exceeded the amounts she recovered
from the driver of her father’s car and from the liability policy on that car, she filed
a claim for underinsured benefits pursuant to the policy insuring her father’s other
vehicle. That policy contained a “family car exclusion.” The family car exclusion
prevented an automobile, which is furnished for the regular use of the insured, the
insured’s spouse, or any relative who lives with the insured, from being deemed an
underinsured motor vehicle. The issue before the court was whether an
underinsurance policy could exclude benefits to a family member who is injured in
a different family automobile. Villicana, 181 Ill. 2d at 438-41.
¶ 42 Villicana held that, under the circumstances of the case, the exclusion could be
enforced. Id. at 441. The court noted that the underinsured motorist statute was
enacted to afford consumers the means with which they could protect themselves
from the choices of other drivers over whom they had no control. In the case before
it, the amount of liability and underinsured coverage selected for the vehicle
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involved in the accident was within the control of the insured, who chose lower
limits for that vehicle than for his other vehicle. Id. at 446-47.
¶ 43 Here, in contrast, plaintiff had no control over the amount of liability insurance
purchased by Clinton Evans for his own vehicle. As plaintiff observes, the law
allows State Farm to refuse liability coverage to Clinton Evans, and once Evans
was named as an excluded driver in plaintiff’s policies, plaintiff was obligated to
make sure that Evans did not drive her vehicles. The accident in this case did not
occur while Evans was driving one of plaintiff’s vehicles. The accident occurred
when plaintiff was riding as a passenger in Evans’s vehicle.
¶ 44 The named driver exclusion did not prevent Clinton Evans from driving his
own, separately insured vehicle. The Financial Responsibility Law required Evans
to obtain liability insurance in at least minimum liability amounts, which he did.
Although State Farm argues that plaintiff had control over choosing whether to ride
as a passenger in Clinton Evans’s vehicle, we do not read the underinsured motorist
statute as requiring an insured to determine a driver’s limits of liability coverage
before riding in his vehicle in order to recover underinsurance benefits.
¶ 45 Fuoss also is distinguishable from this case. The insured in that case purchased
liability coverage in the amounts of $25,000 per person and $50,000 per accident
and uninsured motorist coverage in the amount of $15,000 per person and $30,000
per accident. The insurer, however, failed to offer the insured underinsured
motorist coverage. 1 The insured was injured in an automobile accident and settled
with the tortfeasor for $100,000, the maximum amount payable under the
tortfeasor’s liability policy. The insured then sued his insurer, asking the court to
reform his original insurance policy to include sufficient amounts of underinsured
motorist coverage to compensate him for all the damages from the accident, which
he claimed exceeded the $100,000 that he recovered from the tortfeasor. Fuoss, 118
Ill. 2d at 431-32.
¶ 46 The Fuoss court noted that section 143a-2(4) provided that an insured may elect
to purchase limits of underinsured motorist coverage in an amount up to the
1
The statute in effect at the time of the Fuoss decision stated that when an offer of uninsured
motorist coverage was made to the insured, that offer should also include an offer of underinsured
motorist coverage. See Ill. Rev. Stat. 1981, ch. 73, ¶ 755a-2(3).
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uninsured motorist coverage on the insured vehicle, which under the insured’s
policy was $15,000 per person and $30,000 per accident. Id. at 433-34. Even if the
insured’s policy was reformed to increase his uninsured motorist coverage to the
amount of his bodily injury liability limits, and thereby also increase his
underinsured motorist coverage, that amount would be $25,000 per person and
$50,000 per accident, less than the $100,000 that the insured received from the
tortfeasor. Id. The court found the insured’s claim that he would have purchased a
sufficient amount of underinsurance to cover his loss, had the insurance been
offered, was too speculative. Id. The court stated that permitting the insured to
choose underinsured motorist coverage after the fact, in an amount greater than he
originally selected for bodily injury liability coverage, would be “ ‘repugnant to our
system of justice’ ” because the insured would be providing more protection for
himself than he was willing to extend to the general public. Id. at 435 (quoting
Fuoss v. Auto Owners (Mutual) Insurance Co., 148 Ill. App. 3d 526, 535 (1986)).
¶ 47 State Farm suggests that plaintiff in this case is attempting to secure more
protection for herself than she was willing to extend to the general public when she
agreed to and signed the named driver exclusion. This is incorrect. The accident in
this case happened while Clinton Evans was driving his own vehicle, insured under
his own policy. If a member of the general public was injured in an accident with
Clinton Evans, he or she could recover from Evans under Evans’s liability policy. If
that individual’s underinsured motorist policy provided higher limits than Evans’s
liability policy, they could seek underinsured motorist coverage under their policy,
as plaintiff is doing in this case. A member of the general public has the same right
as plaintiff to obtain higher limits of underinsured motorist coverage from their
insurer.
¶ 48 None of the cases cited by State Farm support its claim that the driver exclusion
endorsement in plaintiff’s policies could deny plaintiff underinsured motorist
coverage under the facts of this case. Section 143a mandates that every automobile
liability insurance policy provide uninsured motorist coverage in at least the
minimal amounts required under the Vehicle Code. If the insured’s uninsured
motorist coverage limit exceeds the minimum liability limit required by the
Financial Responsibility Law, as plaintiff’s did, section 143a-2 mandates that the
policy also include underinsured motorist coverage in an amount equal to the
uninsured motorist coverage. Because section 143a-2 mandated that plaintiff’s
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policy include underinsured motorist coverage, excluding plaintiff from
underinsured motorist coverage through a contractual provision violates section
143a-2 and, therefore, public policy, under the facts of this case. The driver
exclusion endorsement in plaintiff’s policies with State Farm was not enforceable
to exclude underinsured motorist coverage to plaintiff for the June 17, 2012,
accident. Accordingly, the appellate court properly affirmed the trial court’s order
granting summary judgment in favor of plaintiff on her complaint for declaratory
judgment.
¶ 49 CONCLUSION
¶ 50 For all the foregoing reasons, we affirm the judgment of the appellate court,
which affirmed the trial court’s order denying State Farm’s motion for summary
judgment and granting plaintiff’s motion for summary judgment.
¶ 51 Appellate court judgment affirmed.
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