Cook County Record

Monday, October 21, 2019

Appeals panel: Underinsured motorist coverage doesn't require State Farm, other insurers to pay more than policy

State Court

By Dan Churney | Jul 30, 2019

CHICAGO -- A state appeals court has sided with Illinois-based insurance giant State Farm, ruling underinsured motorist coverage is meant to make up the difference between what an injured party deserves and the coverage carried by an underinsured driver who is at fault.

The July 25 decision was handed down by Justice Terrence Lavin of the Illinois First District Appellate Court. Justices Mary Anne Mason and Michael Hyman concurred. The ruling upheld the finding of Cook County Circuit Judge Sophia Hall, which favored Bloomington-based State Farm in an action brought by Joseph Gean to collect on underinsured motorist claims.

Gean, who was insured by State Farm, was in a car accident in August 2010. The other driver was covered by Infinity Insurance, with a $20,000 bodily injury limit, which was paid to Gean. In November 2010, Gean was in another traffic crash with a driver covered by Progressive Northern Insurance. The Progressive policy had a $20,000 bodily injury cap, which was also paid to Gean.

Illinois First District Appellate Justice Terrence Lavin |

Gean’s policy with State Farm had underinsured motorist coverage of $100,000 for injury, as well as medical payment coverage up to $1,000. After Infinity and Progressive paid Gean, he put in claims with State Farm, with the insurer paying $1,000 in medical payments for each crash.

The rest of Gean’s claims went to arbitration, with the arbitrator deciding Gean deserved a total of $19,000 for the first accident. The decision meant Gean was to receive no more money, because the $1,000 medical payment payout, plus the $20,000 he received from Infinity, totaled $21,000 — $2,000 more than the arbitrator said Gean deserved.

For the second accident, the arbitrator said Gean qualified for $25,000. However, this amount was set off by the $1,000 from State Farm and the $20,000 from Progressive. As a result, State Farm presented a $4,000 check to Gean to cover the difference. Gean rejected the check, asserting he deserved the full $19,000 and $25,000 amounts, in addition to the other payouts, awarded in arbitration.

Gean went to court to force State Farm to pay $44,000. However, the judge found State Farm was allowed the setoffs. Gean appealed, contending his policy allows for a “double setoff," which violates the Illinois Insurance Code, by letting State Farm apply two setoffs against his underinsured motorist coverage.

Lavin did not buy Gean’s arguments, ruling that the policy didn’t permit a “double setoff,” but moreover, Gean came out ahead after arbitration.

“The purpose of underinsured motorist coverage is to place the insured in the same position he would have obtained had the tortfeasor carried adequate liability insurance," Lavin ruled. "It is not, however, intended to permit an insured to recover amounts from an insurer exceeding the coverage provided by the underinsured motorist policy. 

“Gean was, in fact, placed in a better position because he recovered $2,000 more than he was entitled to for his underinsured motorist claim award of $19,000 [for the first collision]." 

For the second collision, Lavin found that had Gean accepted State Farm’s payment of $4,000, Gean would have been in the same position if Progressive’s coverage limit had been $25,000, which was the same as the arbitration award. 

“State Farm’s insurance policy adheres to the well-established principles of public policy behind the underinsured motorist statute,” Lavin concluded.

Gean was represented on appeal by attorney Fernando Bustamante, of Romaker Law in Chicago.

State Farm was represented by attorney Frank Stevens, of Taylor Miller LLC in Chicago.

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Organizations in this Story

Circuit Court of Cook County Illinois First District Appellate Court Romaker Law State Farm Insurance Taylor Miller, Llc

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