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Hanover Insurance Co. v. Cormack





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


Rehearing denied November 26, 1979.

The plaintiff, Hanover Insurance Company (Hanover), sought a judgment declaring that its liability for injuries caused by an uninsured motorist is limited to a maximum amount of $20,000 per accident under an insurance policy issued to the defendant, George Cormack. Cormack's son, who was covered under the policy, was killed while a passenger in an uninsured auto. Cormack contends that he is entitled to "stack" the uninsured motorist benefits due upon his son's death and receive a separate $20,000 for each of the three cars he insures under the policy, for a recovery of $60,000 per accident. On cross motions for summary judgment the trial court ruled that Cormack was entitled to three separate recoveries of $20,000 under the policy, less a proportionate amount reflecting a discounted premium paid for two of the cars. Hanover appeals this decision, asserting that the court misinterpreted the coverage of the policy's uninsured motorist protection. Cormack requests a modification of the decision, contending that it was error to allow a proportionate reduction of the cumulative recovery.

The policy in question provides Cormack with several types of insurance coverage: liability, accidental death, towing and uninsured motorist protection. The single declaration page of the policy lists the three cars and the premiums Cormack paid for each: $64 per month for the first car, $52 per month for the second car and $52 per month for the third car. Written after a description of each car, under the heading "Uninsured Motorist — each accident," is $20,000.

A section of the policy labeled "Limits of Liability" states:

"Regardless of the number of * * * automobiles * * * to which this policy applies * * *

(C) the limit for Uninsured Motorist Coverage stated in the declarations as applicable to each accident is the total limit of the company's liability for all damages because of bodily injury sustained by one or more persons as a result of one accident."

The separability clause, under the heading "Other Automobile Insurance in the Company," states:

"With respect to any occurrence, accident, death or loss to which this or any other automobile insurance policy issued to the named insured by the company also applies, the total limit of the company's liability under all such policies shall not exceed the highest applicable limit of the liability or benefit amount under any one such policy.

When two or more automobiles are insured hereunder, the terms of this policy shall apply separately to each, * * *."

Under the policy, uninsured motorist protection extends to Cormack, relatives living in Cormack's household and any persons who are injured by uninsured motorists while driving or riding in the insured cars with Cormack's permission.

James Richardson, an actuary for Hanover, gave an evidence deposition which was made part of Hanover's motion for summary judgment. Richardson explained that the variance in premiums paid by Cormack for each car reflected a discount which the company gave when a single owner insured more than one car with it, even if the cars were covered under three separate policies, instead of a single policy, as in this case. According to Richardson the discount takes into account a variety of factors, including the uninsured motorist risk. $1.65 of the $64 premium paid for the first car went toward uninsured motorist coverage; only $1.35 out of each $52 premium paid went toward the uninsured motorist coverage for the second and third cars. The premium on the first car, Richardson said, covered the gamut of uninsured motorist risks, providing protection to Cormack and his relatives if they were injured by an uninsured motorist while riding in the first car, if they were injured while pedestrians, and if they were injured while occupants of a car not covered by the policy. The premium also paid for protection to any passengers in the first car who were injured by an uninsured motorist. Richardson said the smaller premium paid for the second and third cars indicated, in part, a lesser uninsured motorist risk experienced by Hanover in regard to the second and third cars. It paid for only those risks not covered under the first car's protection: injuries suffered while the insureds were riding in the second and third cars and injuries suffered by any passengers while riding in the second and third cars.

• 1, 2 Whether Cormack is entitled to "stack" the $20,000 allotted as the per accident uninsured motorist recovery for each of the three cars covered under the policy entails an examination of the language of the insurance policy and the circumstances surrounding its issuance to determine what the parties reasonably contemplated when they entered into the contract. (Squire v. Economy Fire & Casualty Co. (1977), 69 Ill.2d 167, 175, 370 N.E.2d 1044, 1047.) An insurance contract can limit a company's liability for accidents involving an uninsured motorist so long as the limitation complies with section 143a of the Illinois Insurance Code. (Ill. Rev. Stat. 1977, ch. 73, par. 755a; see Glidden v. Farmers Automobile Insurance Association (1974), 57 Ill.2d 330, 312 N.E.2d 247; Putnam v. New Amsterdam Casualty Co. (1970), 48 Ill.2d 71, 269 N.E.2d 97; Stryker v. State Farm Mutual Automobile Insurance Co. (1978), 74 Ill.2d 507, 386 N.E.2d 36.) Section 143a requires that every auto insurance policy compensate an insured in the event of injury by an uninsured motorist to the same extent the insured would have been compensated if the motorist had coverage in compliance with the financial responsibility law. The financial responsibility law requires that a motorist carry insurance providing a minimum $10,000 recovery to any one person injured in an accident, up to a maximum $20,000 recovery per accident. Ill. Rev. Stat. 1977, ch. 95 1/2, par. 7-203.

• 3, 4 The limitation clause of the policy in this case restricts uninsured motorist benefits "regardless of the number of automobiles to which the policy applies" to the recovery permitted "as a result of any one accident." The declaration page in the policy lists a recovery limit of $20,000 per accident. We believe such language conveys the intent of the parties to confine the recovery under the policy for any one incident involving an uninsured motorist and any one of the cars and any of the people insured under the policy to $20,000. Since that is within the protections mandated by the uninsured motorist ...

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