Articles Posted in Insurance Claims

A common risk faced by Illinois drivers is being struck by a driver that is underinsured. To save money on premiums, many drivers carry only the minimum amount of bodily injury liability coverage, which is $20,000. So what happens when you are involved in an accident with a driver who does not carry enough liability insurance to cover your personal injuries? If you elected to carry underinsured motorist insurance coverage, you may be protected from the risk posted by an underinsured driver.

History of UIM Coverage

Prior to underinsured motorist (UIM) coverage being offered by Illinois insurance carriers, motorists had the option of carrying only uninsured motorist (UM) coverage. UM coverage is insurance that offers protection from drivers who do not carry automobile liability insurance at all. If an insured motorist carrying $100,000 of UM coverage was involved in an accident with a motorist who had bodily injury liability limits of $20,000, the injured person could recover nothing from his or her UM policy; the only remedy was to collect the at-fault driver’s limits of $20,000. In effect, the responsible, insured driver would have been in a better position if the other driver had been completely uninsured. E.g Hathaway v. Standard Mut. Ins. Co., 285 Ill. App. 3d 67 (1996). Legislators responded to this inequity in 1980 by enacting a statute requiring insurance companies to offer underinsured motorist coverage in amounts equal to uninsured coverage. See 215 ILCS 5/143a-2.
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In car accident cases, lawyers for each party are permitted to conduct written discovery by issuing subpoenas, propounding a list of written questions called “interrogatories,” or serving document requests. The use of discovery to obtain personal information posted on social media sites has recently become a hot topic. To what extent should discovery in a lawsuit be allowed when it seeks information from personal social media accounts? More specifically, should someone’s Facebook account be a subject of discovery when that person has been involved in a motor vehicle accident?

Recently, Federal Courts have addressed whether Facebook and social media sites are discoverable in civil litigation. In 2011, the United States District Court for the Eastern District of Michigan, in Chauvin v. State Farm Mut. Auto. Ins. Co., denied the defendant’s request to access the plaintiff’s Facebook account and held that “…discovery requested is available through less intrusive, less annoying and less speculative means…there is no indication that granting access to Plaintiff’s private Facebook account would be ‘reasonably calculated’ to lead to discovery of admissible information.” Chauvin v. State Farm Mut. Auto. Ins. Co., Case No. 10-11735 (E.D. Mich 2011). The Court saw no reason for one party to have access to the other’s Facebook page where there were much less intrusive ways to obtain the same information. In 2011, a Pennsylvania Court in Piccolo v. Paterson held that the plaintiff in a car accident did not have to accept a friend request on Facebook from the defendant, particularly since the defendant wished to access the plaintiff’s posts and view pictures of the accident.
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The aftermath of a motor vehicle accident can be legally complex. Often times, a person other than the driver to the striking vehicle, may be additionally responsible for the damages caused by a motor vehicle collision. Under Illinois law, two common scenarios in which a person or entity may be found legally responsible for damages caused by a negligent driver arise in (1) the parent-child relationship, and (2) the employer-employee relationship. Whether a parent or an employer is legally responsible for the at-fault driver will a careful analysis of the facts surrounding the accident and the relationships of the parties.

Parent-Child Relationship

If a child gets into an accident while driving his or her parents’ car, the injured plaintiff may be able to sue the parents in certain, but not all, situations. Parents are not liable for the injuries caused by their children merely because their child causes an accident. In Illinois, parents may be held liable under an “agency” theory for their child’s negligent driving if the child was engaged in running an errand for or doing the parents’ business at the time of the accident. Stellmach v. Olson, 242 Ill.App.3d 61, 64 (2nd Dist. 1993). However, the Stellmach Court explained that a parent is not liable for damages caused by a child who drove the parent’s car for the child’s own purposes, even if the parent consented to that use. Stellmach, 242 Ill.App.3d at 65. If, instead, the child was using the car to run a family errand, then the parent will be liable. Stellmach, 242 Ill.App.3d at 64. The question of whether an action is a family errand will be a question of fact for the jury to consider during the trial. Id.
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The common fund doctrine serves to limit an insurance company’s recovery of insurance liens from a Plaintiff’s settlement. The common fund doctrine is an exception to the American rule on attorney’s fees. Typically, each party is responsible for their own attorney’s fees unless there is a statute or an agreement between the parties to the contrary. However, the common fund doctrine allows an attorney to collect a reasonable fee from a fund created through the attorney’s efforts. The rationale is to prevent the unjust enrichment of other parties, such as an insurance company, through the lawyer’s hard work, without paying their fair share.

Commonly, this doctrine is applied in cases involving car accidents, pedestrian accidents, and bicycle accidents in which the plaintiff’s insurance company has paid for medical expenses for the plaintiff’s injuries and is seeking repayment from the at-fault defendant’s insurance company. For the common fund doctrine to apply, the attorney must create the fund through legal services, the subrogee or claimant must not have participated in bringing about the creation of the fund, and the subrogee received a benefit from the common fund. However, the doctrine will not apply when the subrogee expresses a prompt, clear, and unequivocal desire to pursue its own subrogation claim against the defendant’s insurance company.
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When a Plaintiff settles his personal injury claim, he may also have one or more liens against the amount of the recovery. Healthcare liens against a settlement may be asserted by the medical providers who have treated and rehabilitated the Plaintiff after suffering an injury. These liens are covered by the Health Care Services Lien Act. 770 ILCS 23/1, et seq. Any licensed hospital, doctor, or physical therapist which has provided medical services may elect to place a lien on the claim.

If the Plaintiff recovers a settlement or judgment, notice of the recovery must be given to each lien holder. The lien holder may seek payment of the amount of reasonable charges which remain unpaid. The Health Care Services Lien Act places limitations on the amount a lien holder can recover from the settlement or judgment.
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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.
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The biggest distinction between filing a lawsuit against an individual for a car accident and filing an uninsured/underinsured motorist claim (UM/UIM claim) against an insurance carrier is that the latter will be sent to arbitration for adjudication. Illinois law requires insurance companies to include arbitration clauses in all insurance contracts containing UM coverage (215 ILCS 5/143a). Additionally, many insurance companies have arbitration clauses in their UIM insurance contracts. Illinois utilizes arbitration as a means of providing a more efficient means for those with a UM/UIM claim to have their case heard and have a just decision reached. Medical bills from a car accident add up quickly. The sooner a result can be obtained, the better.

To initiate the arbitration, the insured’s counsel must send a written demand for arbitration to the insurance company. The demand for arbitration is akin to filing a lawsuit. The demand must be clearly stated and sent within the time specified by the insurance policy. The demand should include information about the insured and name the insured’s arbitrator. The Insurance company will then name their own arbitrator. Then, both arbitrators will select a third “neutral” arbitrator within forty-five days to complete the panel. If the third arbitrator is not selected within the allotted time, either party may request that the case be sent to the American Arbitration Association (AAA). Some insurance contracts provide that all UM/UIM arbitrations be sent to the AAA. When the AAA hears the arbitration, they may choose to use a single arbitrator, or a panel of three.
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A setoff is a defense to a legal judgment for damages. A setoff can be either partial or total. When an insured party is making a claim against their insurance company for an Uninsured/Underinsured Motorist claim (UM/UIM claim) for an auto accident, bike accident, or pedestrian accident, the amount awarded in the claim may be reduced or “setoff” by any amount already covered from the at-fault motorist. A setoff is used to prevent double recovery, as compensatory damages are designed to make a person whole, not to punish the other party or provide a windfall for the insured.

A setoff often applies in an underinsured motorist claim. Recovery from the underinsured motorist is deducted from an arbitration award against the underinsured motorist carrier to prevent double recovery. For a setoff to be considered, the insurance company must submit the claim to the arbitrator. Unlike issues involving coverage, which are the domain of the courts, any disputes over damages must be presented to the arbitrator or they are considered waived.
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Under the Illinois Liquor Control Act (“Dram Shop Act”), third parties who are injured by an intoxicated person may have a cause of action for damages against the seller of alcoholic liquor, who by selling or giving alcoholic liquor, causes the intoxication of such person. In many cases, the Act provides a remedy to individuals who are innocent victims injured in car accidents and bar fights. The Act provides no remedy for intoxicated persons who themselves are injured.

The amount of damages that may be sought against a bar or restaurant under the Act is limited in amount by statute and is specified by year.

The decision in Nicholson v. State Farm Mut. Ins. Co. is a win for automobile insurance policyholders in Illinois. It also imposes a new obligation on insurance carriers to obtain a signed coverage election form before binding coverage, when the insured makes a “material change” in the policy.

The Illinois Supreme Court has denied an appeal by State Farm Insurance, thus, allowing to stand the decision of the Illinois Appellate Court in Nicholson v. State Farm Insurance, No. 2-08-0639 (2nd Dist. 2010) construing the obligations of an insurance carrier to provide underinsured motorist coverage pursuant to Section 143a–2 of the Illinois Insurance Code (215 ILCS 5/143a–2 (West 1998). Under the decision, “whenever liability coverage is increased above that provided under the previous policy, insurers must again offer UM (“uninsured motorist”) coverage equal to liability coverage and obtain a signed election declining such equal coverage.” The decision represents an expansion of consumer rights for purchasers of automobile insurance in Illinois in those instances in which UM coverage is elected in amount that is less than the amount of BI (“bodily injury liability”). Previous to the decision announced in Nicholson, only new “applicants” (not existing insureds) were required to be given an offer of coverage. Now, every insured must sign an election of coverage form before any material change in the policy is made, assuming they are selecting coverage for UM that is less than BI.
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