Opinion ID: 2523992
Heading Depth: 1
Heading Rank: 4

Heading: Public Policy Supporting Underinsured-Motorist Insurance

Text: With several exceptions not relevant here, all motor vehicles operated or registered in this state must be covered by a liability insurance policy. 625 ILCS 5/7-601(a) (West 2006). The policy must include coverage for bodily injury in at least a minimum amount specified by the Financial Responsibility Law, currently $20,000. 625 ILCS 5/7-203 (West 2006). In addition, motor vehicle liability policies must include uninsured-motorist coverage. 215 ILCS 5/143a (West 2006). Uninsured-motorist coverage must be provided in an amount equal to the liability coverage, unless the insured specifically rejects such additional coverage. 215 ILCS 5/143a-2(1) (West 2006). If the 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 2006). The principal purpose of the mandatory liability insurance requirement is to protect the public by securing payment of their damages. Progressive Universal, 215 Ill.2d at 129, 293 Ill.Dec. 677, 828 N.E.2d 1175. To further that end, uninsured-motorist coverage is required `to place the policyholder in substantially the same position he would occupy, so far as his being injured or killed is concerned, if the wrongful driver had had the minimum liability insurance required by the Financial Responsibility Act [citation].' Squire v. Economy Fire & Casualty Co., 69 Ill.2d 167, 176, 13 Ill.Dec. 17, 370 N.E.2d 1044 (1977) (quoting Ullman v. Wolverine Insurance Co., 48 Ill.2d 1, 4, 269 N.E.2d 295 (1970)). In Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 555-58, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992), this court examined the legislative history supporting the underinsured-motorist coverage provision and concluded that the legislative purpose of underinsured-motorist coverage is the same as that of uninsured-motorist coverage,  i.e., to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance. The court noted that [u]ninsured and underinsured motorist policies provide virtually the same coverage to the insured, and that by providing for underinsured-motorist coverage in addition to uninsured-motorist coverage, the legislature avoided the absurdity of a situation where a policyholder would receive fewer benefits in the fortuitous event of being injured by an underinsured rather than by an uninsured motorist. Id. at 557, 169 Ill.Dec. 254, 591 N.E.2d 427. Thus, as we have recently noted, under Illinois law liability, uninsured-motorist, and underinsured-motorist coverage provisions are inextricably linked. Schultz v. Illinois Farmers Insurance Co., 237 Ill.2d 391, 404, 341 Ill. Dec. 429, 930 N.E.2d 943 (2010). All three serve the same underlying public policy: ensuring adequate compensation for damages and injuries sustained in motor vehicle accidents. Despite the interrelatedness of uninsured-motorist and underinsured-motorist coverages, relevant differences exist between the statutory mandates. The Illinois Insurance Code requires that any dispute with respect to the coverage and the amount of damages under an uninsured-motorist policy must be submitted for arbitration. 215 ILCS 5/143a(1) (West 2006). At the time of Rosen's injury, the statute also provided, Any decision made by the arbitrators shall be binding for the amount of damages not exceeding the limits for bodily injury or death set forth in Section 7-203 of the Illinois Vehicle Code. 215 ILCS 5/143a(1) (West 2000). Thus, at the time of Rosen's injury, the arbitration provision in her underinsured-motorist policy matched the arbitration provision required by law for uninsured-motorist policies. In 2004, the statute was amended to create a higher binding threshold for awards where the policyholder has coverage exceeding the statutory minimum, up to a maximum threshold of $50,000 for a single injured person. It now provides: Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $50,000 for bodily injury to or death of any one person, $100,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less. 215 ILCS 5/143a(1) (West 2008). However, the statutory provision mandating underinsured-motorist coverage has never required a similar arbitration agreement. Indeed, the underinsured-motorist statute has never required arbitration of any kind.