Articles Posted in Uninsured and Underinsured Motorist Claims

Although amounts vary, nearly every state, including Illinois, requires minimum vehicle liability insurance. The mandate is designed to protect people from the risks posed by uninsured drivers. The reality, however, is that there are many uninsured motorists on the roads. Considering the most common personal injury claims arise from traffic accidents, the risks posed by uninsured motorists cannot be overstated. Unless the proper steps are taken, a relatively straightforward process can become an expensive, time-consuming endeavor, resulting in unpaid medical bills and a judgment-proof defendant.
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Illinois Traffic Crash Reports are made by the police when a vehicle is involved in a collision (See an example Illinois Traffic Crash Report here). They are used for vehicle crashes, vehicle collisions with a pedestrian, and vehicle collisions with a bicyclist. If police are called to the scene of a collision, an Illinois Crash Report will be filled out. A more detailed report will be made if there is a death, serious injury, or if a vehicle has to be towed from the scene.

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The basic information included in the Crash Report is the street or intersection where the accident occurred, the municipality where the accident occurred, the county where the accident occurred, as well as the date, and the time of the accident. This information can be found in the box at the top of the report.
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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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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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