Illinois Uninsured/Underinsured Claims

An uninsured/underinsured (UM/UIM) claim often arises after a car accident. If the person at-fault for the accident flees the scene and is unable to be located, or if the person at-fault does not have insurance or has inadequate insurance, an uninsured/underinsured claim (sometimes called, “UM/UIM”) should be brought immediately. UM/UIM claims often arise in pedestrian accidents, bicycle accidents, and hit & run accidents.

In a typical liability car accident case, notice to the other party need not be given before filing a complaint. Contrastingly, when making a UM/UIM claim, there are strict notice provisions that must be met before the claim can proceed. A UM/UIM claim is made against the Plaintiff’s own insurance company, and the requirements for the notice provisions may be found in the Plaintiff’s insurance contract. In most instances, it is best to have your attorney inform the insurance company of the claim, in writing, via certified mail, as soon as possible. Giving notice and demanding arbitration under the policy is not the equivalent of filing a lawsuit. It merely informs the insurance company that a claim exists, and it allows the insurer to begin investigating the claim. Failure to provide timely notice with a proper demand for arbitration can result in waiver of the claim, even if there is no prejudice to the insurer.

Upon filing an uninsured motorist claim, proof that the at-fault driver lacks insurance should be sent to the insurance company. This can be shown through proof that: (1) the accident was a hit and run; (2)certification by the Illinois Department of Transportation; (3) an affidavit from the driver at-fault; (4) a letter from the at-fault driver’s insurance company denying coverage; or (5)proof of insolvency of the at-fault driver’s insurance company.

Often, an underinsured motorist policy will require the insured to first exhaust the liability coverage of the at-fault driver. However, it is important to remember that failure to receive the entire liability limits of the at-fault driver’s policy does not preclude filing an underinsured motorist claim. As of January 1, 1997, Illinois law explicitly provides that a judgment or settlement of a claim against the at-fault driver for less than policy limits does not bar underinsured motorist claim. 215 ILCS 5/143a-2(7).

The most significant difference between a standard liability case and a UM/UIM claim is that the UM/UIM claim will be heard at an arbitration, rather than a trial. Arbitration will not cover every possible issue that might arise from a claim. A hearing at arbitration will determine (1) the liability of the uninsured or underinsured driver and (2) the amount of damages. Any other disputes arising from the claim, such as whether the UM/UIM policy was in effect at the time of the accident, or whether the at-fault driver actually is uninsured, will not be heard by the arbitrator. Instead, “coverage” issues such as these must be presented to a court in a declaratory judgment lawsuit. However, even if coverage or the status of the at-fault driver is in dispute, the UM/UIM claim will still be sent to arbitration. A determination of an insurance company’s duty to indemnify is not ripe until after the arbitration decision.

Illinois has adopted arbitration as the legal mechanism to bring a for UM/UIM claim so these claims may be processed quickly and efficiently. For this reason, the decisions of the arbitrators are final, and a judgment will not be reversed because of mistakes of law or fact. Because of this, appellate review of an arbitrator’s judgment is more limited than appellate review of a trial court’s judgment. However, the arbitrator’s judgment is only binding up to $50,000.00. An award exceeding $50,000.00 can be challenged by either party.

However, recently, the Illinois Supreme Court in Phoenix Insurance Company v. Rosen 2011 IL 110679 held that trial de novo clauses, often called an “escape hatch,” are enforceable and are neither violative of public policy nor unconscionable. These clauses allow either an insurance company which receives an unfavorable arbitration decision or an insured who believes the arbitrator’s judgment to be insufficient to cover damages to reject that decision and demand a jury trial. A trial de novo clause is only a concern if it is part of the insurance contract.

UM/UIM claims can be complicated and procedurally complex. If you or a loved one has been in an accident with an uninsured or underinsured motorist, contact an experienced attorney so you do not lose your right to compensation.

Full text of Phoenix Insurance Company v. Rosen can be found at:
http://www.state.il.us/court/Opinions/SupremeCourt/2011/April/110679.pdf