DuPage County Personal Injury Lawyers: What to do When the Driver Who Injures You is Underinsured?

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.

Purpose of UIM Coverage

The purpose of UIM coverage is to protect the insured and any additional insureds from the risk that a negligent driver of another vehicle (1) will cause injury to the insured or his additional insureds and (2) will have inadequate liability coverage to compensate the injuries caused by his or her negligence. See 215 ILCS 5/143a-2(4); In re Estate of Anderson, 408 Ill. App. 3d 428 (2011).The UIM statute defines an underinsured motor vehicle as one whose total amounts of liability coverage are less than the underinsured coverage maintained by the insured at the time of the accident. 215 ILCS 5/143a-2(4). UIM coverage offers responsible drivers an insurance option to protect from both UIM motorists and UM motorists. By purchasing UIM protection, drivers will be compensated regardless of whether the at-fault driver has appropriate liability insurance. Hathaway, 285 Ill. App. 3d at 69.

Settling a UIM Claim

Pursuant to the UIM statute, the UIM claimant must first notify his or her underinsured motorist carrier in writing of his or her intent to settle with the underinsured’s liability insurer. The statute further requires the UIM carrier to either approve of the settlement and release of tortfeasor, or to pay the underinsured claimant the proposed settlement amount, within 30 days of the claimant’s notice of intent to settle with the at-fault party. 215 ILCS 5/143a-2(6). However, as case law demonstrates, claimants should be careful when signing a release that discharges the insurance company when settling a claim.
In Farmers Automobile Insurance Association v. Kraemer, 367 Ill. App. 3d 1071 (2006), an underinsured motorist carrier sought a judgment that it was not required to pay UIM coverage benefits to the insured defendant. Following the accident, the underinsured motorist’s insurance carrier offered $25,000 in exchange for a release memorializing the settlement. Defendant accepted the offer which discharged the underinsured motorist and “any other . . . corporation charged or chargeable with responsibility of liability. Farmers, 367 Ill. App. 3d at 1072. The court held that the claimant did not intend to discharge her underinsured motorist claim or carrier. The court reasoned that the effectiveness or scope of a release is controlled by the intention of the parties which can be discerned from the language used and the circumstances of the transaction.
Alternatively, Illinois’ courts have denied some underinsured motorists claims due to an overly broad release. In Martin v. Illinois Farmers Insurance, 318 Ill.App.3d 751 (2000), plaintiff’s husband was killed in a vehicle whose driver had liability insurance with the defendant insurance company. Following the accident, plaintiff executed a release discharging “the insured . . . and insurance carriers from any and all . . . damages . . . resulting from. . . the accident.” Martin, 318 Ill. App. 3d at 756. The court held that the UIM claim was within the scope of the language of the release with the at-fault party, thus denying the subsequent claim against the family’s UIM insurance carrier.


Although the primary function of underinsured coverage is to place an injured party in the same position as if the underinsured driver had been adequately insured, it is the insured’s responsibility to carry the appropriate UIM coverage. If an accident does occur that requires the filing of a UIM claim, the claimant must be cautious of signing any release discharging any responsible party, and should contact competent legal counsel to assist them in filing a UIM claim and at every step along the way.

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