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Kaufmann v. Economy Fire & Casualty Co.

OPINION FILED JULY 14, 1977.

JUSTIN KAUFMANN ET AL., PLAINTIFFS-APPELLEES,

v.

ECONOMY FIRE AND CASUALTY COMPANY, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.

MR. PRESIDING JUSTICE DIERINGER DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 1, 1977.

This is an appeal of an action for declaratory judgment to construe uninsured motorist liability of an insurance carrier under two separate policies of auto liability insurance, issued by Economy Fire and Casualty Company (Economy) to members of the Kaufmann family. Justin and Geraldine Kaufmann were the named insureds on one policy, and Daniel Kaufmann was the named insured on the other policy. Four members of the Kaufmann family (plaintiffs) were injured in a collision caused by an uninsured third party. Plaintiffs, all being within the definition of insureds under each policy, claimed they were afforded coverage under both policies and the uninsured motorist (family protection) coverages of the two policies should be stacked. Economy invoked the "other insurance" clause of one of the policies, as precluding the aggregating of the insurance, and also maintains a "specific exclusion" clause of one of the policies is in force. The circuit court of Cook County held the coverages of the two policies applied and could be stacked. From a summary judgment in favor of the plaintiffs, Economy has appealed.

Submitted for review are the issues of (1) whether, in the instant factual setting, the "other insurance" clause, which limits coverage to the maximum single limits scheduled in itself and any other applicable policy, precludes stacking of the uninsured motorist sections of the two policies; and (2) whether a "specific exclusion" making an auto insurance policy inapplicable to bodily injury to an insured while occupying an auto other than an "insured automobile" is a valid restriction in light of mandatory requirements of the uninsured motorist statute in the Illinois Insurance Code (Ill. Rev. Stat. 1973, ch. 73, pars. 755a and 1054).

The facts of this case are not disputed. On November 10, 1974, an auto driven by Daniel Kaufmann was struck head-on by an auto driven by an uninsured motorist. Daniel suffered various injuries, as did three passengers in his auto, his parents, Justin and Geraldine Kaufmann, and his brother Judd.

At the time of the accident two insurance policies were arguably available. One policy showed the names Justin and Geraldine as the named insureds and the other policy, written on the auto involved in the accident, showed Daniel as the named insured. These two policies were similar in many respects. For the purposes of our discussion the terms of the policies as to Family Protection Coverage are identical, and the coverage therein was provided, in each case, in consideration of the payment of a $4 premium. By this form contract of insurance, Economy agreed to pay all damages because of injury caused by the operator of an uninsured auto. The limit of this liability is $10,000 per person and $20,000 per accident. Defendants do not dispute that part of the trial court's order which allowed coverage under one policy, nor do they challenge the aggregation of the medical expense coverage under both policies.

The contract of insurance in question contains a provision which extinguishes liability for damages caused by the driver of an uninsured auto when such coverage is applicable under another policy of insurance. The section entitled "Other Insurance" provides:

"Other Insurance. With respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under Part IV shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Except as provided in the foregoing paragraph, if the insured has other similar insurance available to him and applicable to the accident, the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the company shall not be liable for a greater proportion of any loss to which this Coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of liability of this insurance and such other insurance."

Plaintiffs sued Economy for a declaratory judgment that both policies were in effect, that they were a single family of insureds paying two separate premiums to a single insurance company, and that each family member was twice covered and therefore entitled to aggregated or stacked coverage under the Family Protection provisions of the two policies.

Contending the damages sustained by plaintiffs exceeded $20,000 and the individual damages of Geraldine Kaufmann exceeded $10,000, plaintiffs sought to hold Economy responsible for the total actual damages sustained to the extent of $20,000 per person and $40,000 per accident.

Economy acknowledged plaintiffs were entitled to the coverage given under the Family Protection provisions of the policy issued to Daniel, but contended, by virtue of the "other insurance" clause contained in the policy issued to Justin and Geraldine, the parents' policy afforded no coverage.

On plaintiffs' motion for summary judgment the trial court granted a declaratory judgment, while specifically finding the "other insurance" limitation was inapplicable and ineffective to prevent stacking of the uninsured motorist coverage. From such judgment Economy has filed this appeal.

Insurance covering injuries caused by uninsured motorists is almost universally regulated by statute, and any examination of the problem must begin with the current statutes covering the subject. Uninsured motorist coverage, by State statute, is a required appendage to auto liability policies in Illinois. The Illinois Insurance Code provides, in pertinent part:

"§ 143a. (1) * * * [N]o policy insuring against lost resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered * * * unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death [of $10,000 per individual and $20,000 per accident] * * * for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom * * *.

§ 442. Validation of Illegally Issued Policies.) Any contract or policy of insurance * * * issued in violation of any section of this Code requiring certain provisions to be inserted therein * * * shall nevertheless be held valid but shall be construed in accordance with the requirements of the section that the said policy * * * violates, and when any provision in such contract * * * is in conflict with any provision of this Code, the rights, and obligations of the company thereunder shall not be less favorable to the holder of the contract and the ...


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