Reduction not Expressly Permitted for Underinsured Motorist Benefits Recovered under Bodily Injury Coverage on Fully Insured Vehicle
In Allstate Property and Casualty Insurance Company v. Trujillo, Allstate filed a declaratory judgment action. Allstate Property and Casualty Insurance Company (“Allstate”) issued a policy to Adan Delgado (“Delgado”). The policy provided automobile liability insurance, including bodily injury coverage, with a limit of $100,000 per occurrence. The policy also included uninsured motorist insurance, the bodily injury coverage of which included underinsured motorist protection. An Illinois amendatory endorsement to the Allstate policy stated in part as follows: “If the accident involves the use of an underinsured motor vehicle, the limits for this coverage will be reduced by: 1. all amounts paid by or on behalf of the owner or operator of the underinsured auto or anyone else responsible. This includes all sums paid under the bodily injury or property damage liability coverage of this or any other auto insurance policy.” Trujillo was a passenger in an Allstate-insured vehicle driven by Delgado when the vehicle was involved in an accident with a vehicle insured by American Access Insurance Company (“American Access”). Trujillo settled her claim against American Access and against Delgado. Trujillo also made a claim against Allstate for underinsured motorist benefits seeking the difference between the Allstate policy’s underinsured motorist coverage and the amount received from her settlement with the American Access insured. Allstate explained the limits of the underinsured motorist coverage were reduced to zero by its $100,000 payment to Trujillo, on Delgado’s behalf, under the bodily injury coverage of the Allstate policy’s automobile liability insurance.
The court reviewed whether Allstate was entitled to set off claims for underinsured motorist benefits with amounts Allstate paid under the bodily injury coverage for the same insurance policy.
Trujillo alleges that the reduction of the underinsured motorist coverage violates public policy. In this case, the endorsement to the underinsured motorist coverage in the Allstate policy provided, in pertinent part, that the limits of the coverage will be reduced by “sums paid under the bodily injury liability coverage of this auto insurance policy.”
Under Illinois Insurance Code, a reduction for “amounts actually recovered under the applicable bodily injury insurance policies, bonds, or other security maintained on the underinsured motor vehicle” is permitted. 215 ILCS 5/143a-2(4) (West 2008). However, the statute does not expressly permit the reduction of underinsured motorist benefits for amounts recovered under the bodily injury coverage maintained on the fully insured vehicle.
Allstate Prop. & Cas. Ins. Co. v. Trujillo, 2014 IL App (1st) 123419.
