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Spearman v. State Security Ins. Co.

OPINION FILED JANUARY 23, 1978.

ELSIE SPEARMAN, PLAINTIFF-APPELLANT,

v.

STATE SECURITY INSURANCE COMPANY, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Plaintiff, Elsie Spearman, filed suit against defendant State Security Insurance Co., for a declaratory judgment directing defendant to submit to arbitration pursuant to the Uniform Arbitration Act (Ill. Rev. Stat. 1975, ch. 10, par. 101 et seq.) and in accordance with an automobile insurance policy issued to plaintiff. The suit arose from defendant's refusal to arbitrate a claim made by plaintiff under the "uninsured motorist" provision of the policy. Previously, plaintiff had been in an automobile accident with a motorist whose insurance carrier subsequently became insolvent.

After a bench trial, the trial court found for defendant and held that plaintiff should have made a claim against the Illinois Insurance Guaranty Fund, rather than proceeding under her insurance policy.

From that judgment, plaintiff appeals. Plaintiff argues that there can be no recovery under the Illinois Insurance Guaranty Fund until one has exhausted their rights under their own policy.

We reverse and remand with directions.

The facts are undisputed. On June 9, 1972, plaintiff Elsie Spearman was in an automobile accident with an automobile driven by Robert Boone in Thorton Township, Cook County, Illinois. At the time, plaintiff was covered by a policy of liability insurance issued to her by defendant State Security Insurance Company. Similarly, Robert Boone had a policy of insurance issued to him at the time of the accident. However, Boone's carrier, Metro Casualty Company, became insolvent several months after the accident.

Plaintiff's insurance policy with defendant provides:

"To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called `bodily injury', sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile."

Said policy further defines "uninsured automobile" as:

"(c) an automobile with respect to which there is a bodily injury liability insurance policy applicable at the time of the accident but the company writing the same is or becomes insolvent subsequent to the date of the accident."

The insurance policy also contains an arbitration provision that provides for the selection of an impartial arbitrator which a dispute between the insured and the insurer arises as to whether the insured can recover under the policy for injuries caused by the uninsured motorist.

Relying on these provisions, plaintiff made an uninsured motorist claim under her insurance policy. However, defendant denied liability on the basis that Mr. Boone was not the owner or operator of an uninsured automobile, by virtue of the existence of the Illinois Insurance Guaranty Fund (Ill. Rev. Stat. 1975, ch. 73, par. 755a). Defendant stated that plaintiff's proper recourse was to file a claim against the Fund, rather than her insurance policy, since the purpose of the Fund is to protect insured motorists from motorists whose insurance carriers subsequently become insolvent.

When defendant refused to submit to arbitration in order to settle the claim, plaintiff filed a suit for declaratory judgment seeking to compel arbitration. After a bench trial, the trial court rendered a judgment in favor of defendant.

From the judgment, plaintiff appeals. Plaintiff argues that it was improper for defendant to refuse to arbitrate and further argues that an insured must exhaust his claim under the uninsured motorist and arbitration provisions of his insurance policy before ...


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