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06/14/88 Karen E. Overbey, v. Farmers Insurance Company

June 14, 1988

KAREN E. OVERBEY, PLAINTIFF-APPELLANT

v.

ILLINOIS FARMERS INSURANCE COMPANY, DEFENDANT-APPELLEE. -- KAREN E. OVERBEY, PLAINTIFF-APPELLEE,

v.

ILLINOIS



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

FARMERS INSURANCE COMPANY, Defendant-Appellant

525 N.E.2d 1076, 170 Ill. App. 3d 594, 121 Ill. Dec. 769 1988.IL.931

Appeal from the Circuit Court of Du Page County; the Hon. John S. Teschner, Judge, presiding.

APPELLATE Judges:

JUSTICE DUNN delivered the opinion of the court. LINDBERG, P.J., and INGLIS, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE DUNN

Plaintiff, Karen Overbey, filed a five-count complaint alleging that defendant, Illinois Farmers Insurance Company (Farmers), had failed to make meaningful offers of underinsured and uninsured motorist coverage as required by section 143a-2 of the Illinois Insurance Code (Code) (Ill. Rev. Stat. 1987, ch. 73, par. 755a-2). In count I, plaintiff sought reformation of the insurance policy to include proper underinsured motorist coverage. Count II requested exemplary and punitive damages under the Consumer Fraud and Deceptive Business Practices Act (Act) (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261 et seq.), on account of the insufficient offer of underinsured motorist coverage. The third count requested exemplary and punitive damages for breach of fiduciary duty, again on account of the improper offer of underinsured motorist coverage. Count IV alleged the offer of uninsured motorist coverage was insufficient and requested reformation of the policy to include such coverage. In count V, plaintiff sought exemplary and punitive damages under the Act based on the improper offer of uninsured motorist coverage. After a bench trial, the court entered an order finding that no meaningful offer of underinsured motorist coverage was made and reforming the policy of insurance to provide underinsured motorist coverage in amounts equal to the bodily injury liability limits of the policy, which were $100,000 per person and $300,000 per occurrence ($100,000/$300,000). The court denied plaintiff relief under counts II and III on grounds reformation of the policy was the proper remedy. Relief under counts IV and V was also denied.

Both parties appealed. The appeals were consolidated and raise the following issues. Defendant argues it complied with the applicable provisions of the Code by providing uninsured/underinsured motorist coverage and the option to increase the limits of that coverage up to the limits of the bodily injury liability limits. Plaintiff contends: (1) the policy should have been reformed to provide underinsured motorist coverage equal to the maximum amount of the bodily injury liability limits being offered on the date of the plaintiff's injuries; and (2) defendant's failure to make a proper offer of uninsured/underinsured motorist coverage warranted recovery of exemplary and punitive damages under the Act and punitive damages for breach of fiduciary duty.

Plaintiff was seriously injured in an automobile accident on December 5, 1981. The insurance policy of the party at fault had bodily injury liability limits of $50,000 per person, which was paid over to plaintiff upon settlement of the case in Du Page County; the other party involved was uninsured. Plaintiff was insured under a policy issued by defendant to plaintiff's father, Donald Overbey. The policy provided bodily injury liability coverage limited to $100,000/$300,000 and uninsured motorist coverage of $50,000/$100,000.

At trial, Donald Overbey testified that he began insuring his automobiles with defendant, through agent Dean Roberts, in the late 1970's. When he first applied for an insurance policy with Roberts, Overbey did not recall whether there was any Discussion concerning uninsured motorist coverage. Overbey agreed he would have made a judgment on the limits of coverage for bodily injury and uninsured motorist coverage at the time of the initial application. Overbey, however, did not recall the criteria he used to make the decision on the coverage to obtain and agreed he did not know what he considered important at the time he selected coverage limits. In September 1981, plaintiff purchased a Chevrolet Chevette. Overbey did not recall whether he requested different amounts of coverage from the coverage then existing on the car the Chevette replaced.

Overbey's recollections of pertinent events occurring between the time he first insured his automobiles with defendant and the time of the accident were also limited. Overbey did not recall any specific conversations with Roberts regarding the insurance he carried on the various automobiles insured by defendant. He had no recollection of any conversations with Roberts regarding underinsured motorist coverage or receiving anything in written form from defendant describing the nature of underinsured motorist coverage or that it was available for a relatively small premium. Other than a renewal notice which provided at the bottom, "Did you know that you may now have uninsured motorist coverage in amounts up to your bodily injury liability limits. If interested, contact your agent," Overbey did not recollect receiving any documents concerning uninsured motorist coverage. Nor did he recall any conversations with Roberts concerning increasing his uninsured motorist coverage, the nature of such coverage, or the premiums required to obtain such coverage. Overbey acknowledged he made changes in the policies during the relevant time period but could not recall when the changes were made or what items were altered.

Overbey stated that prior to the accident he did not understand underinsured motorist coverage. Since the accident, Overbey testified he has developed a better understanding of underinsured motorist coverage. Based on what Overbey learned since the accident, he stated he would have purchased underinsured motorist coverage in amounts equal to the maximum bodily injury liability coverage available.

Joyce Johnson, a supervisor employed at defendant's office in Aurora, testified regarding the policy coverages in effect at the time of the accident. Johnson explained the insurance policy included an endorsement (E235) which amended the uninsured motorists coverage as follows:

"The definition of "Uninsured Motor Vehicle" under the Uninsured Motorist Coverage is amended to include a motor vehicle where there is bodily injury liability insurance or an applicable bond at the time of accident, but in amounts less than the ...


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