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12/19/89 Gloria Linton, v. Chicago Motor Club

December 19, 1989

GLORIA LINTON, PLAINTIFF-APPELLEE

v.

CHICAGO MOTOR CLUB, INC.,1, DEFENDANT-APPELLANT



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION

549 N.E.2d 648, 192 Ill. App. 3d 813, 139 Ill. Dec. 922 1989.IL.1977

Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

APPELLATE Judges:

JUSTICE HARTMAN delivered the opinion of the court. BILANDIC, P.J., and DiVITO, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE HARTMAN

Plaintiff Gloria Linton sought to reform an insurance policy issued to her by Chicago Motor Club Insurance Co. (defendant), which was authorized to write automobile insurance policies in Illinois. Cross-motions for summary judgment were filed by each party. Plaintiff's motion was allowed, and defendant's motion was denied. On appeal, defendant claims error in the circuit court's reformation of the insurance policy, effected by increasing uninsured motorist and underinsured motorist benefits.

Around July 14, 1983, defendant's agent, Herb Scally, gave a written quotation for automobile insurance coverage to plaintiff which included, inter alia, two alternative options: bodily injury liability limits of $15,000 each person and $30,000 each occurrence ($15,000/$30,000), at a premium of $70, with uninsured motorist protection limits of $15,000/$30,000 at an additional premium; or bodily injury liability limits of $25,000/$50,000, at a premium of $85, with uninsured motorist protection limits of $15,000/$30,000 (at the same additional premium quoted in the first option). The written quotation also provided designated spaces for the limits and corresponding premium for underinsured motorist protection, which were left blank under both of the options offered to plaintiff. Plaintiff elected coverage with $15,000/$30,000 bodily injury liability limits and was issued a policy, effective from July 14, 1983, to January 1, 1984, which included bodily injury liability, uninsured motorist, and underinsured motorist limits of $15,000/$30,000.

On July 22, 1983, plaintiff was seriously injured in an automobile accident resulting in damages which exceeded the $15,000 bodily injury limits available under the insurance policy of the at-fault driver. After exhausting the insurance coverage of the at-fault driver in a settlement, plaintiff demanded from defendant increased underinsured motorist benefits in the amount of $25,000/$50,000, asserting Scally's quotation to her violated section 143a-2 of the Illinois Insurance Code (Code) (Ill. Rev. Stat. 1983, ch. 73, par. 755a-2). Defendant refused. This action followed, seeking to reform the policy to reflect uninsured motorist and underinsured motorist limits of $25,000 each person/$50,000 each occurrence., Plaintiff's motion for summary judgment was supported by an affidavit in which she averred, in part:

"If I had been aware that the increased coverage quoted would also give me the opportunity to purchase increased coverage to me under my uninsured motorist and underinsured motorist coverage at a comparable increase in rates, I would have elected to purchase the increased liability, uninsured and underinsured motorist coverage from Chicago Motor Club."

The circuit court struck that portion of plaintiff's affidavit in which she claimed she would have elected to purchase increased coverage if offered. The court then found defendant's alternative written quotation of bodily injury limits of $25,000/$50,000 with uninsured motorist limits of $15,000/$30,000 constituted a "faulty offer" to plaintiff under section 143a -- 2 of the Code. Concluding that defendant's failure to offer additional uninsured motorist coverage with limits of $25,000/$50,000 violated the statute, the circuit court granted plaintiff's, and denied defendant's, motion for summary judgment. The court then reformed the insurance policy to reflect increased limits of $25,000/$50,000 uninsured motorist and underinsurance coverage. Defendant appeals. Whether defendant's offer of additional uninsured/underinsured motorist coverage under section 143a -- 2 of the Code was faulty, or not, we conclude that the circuit court erred in reforming the insurance policy to reflect increased uninsured/underinsured motorist coverage limits of $25,000/$50,000, for reasons which follow.

Plaintiff argues that because defendant failed to offer uninsured motorist coverage2 in an amount equal to the offer of bodily injury liability coverage ($25,000/$50,000), the policy must be reformed to reflect such additional coverage in that increased amount. Defendant contends that the amount of bodily injury liability coverage actually retained by an insured determines the maximum amount of uninsured (and underinsured) motorist coverage available; it concludes that, because plaintiff selected bodily injury liability limits of $15,000/$30,000 and rejected increased limits of $25,000/$50,000, she is entitled only to $15,000/$30,000 of uninsured motorist coverage.

Plaintiff relies on Logsdon v. Shelter Mutual Insurance Co. (1986), 143 Ill. App. 3d 957, 493 N.E.2d 748, to support the reformation of the policy as ordered here by the circuit court. In Logsdon, the Third District Appellate Court attempted to determine the amount of increased coverage to be implied by law where an insurer failed to offer underinsured motorist coverage as required by the Code. The insured in that case sought the implication as a matter of law of underinsured motorist coverage in an amount sufficient to fully cover his damages or, alternatively, reformation of the policy up to the maximum bodily injury coverage offered by the insurer for the last renewal period prior to the injury. The insurer, on the other hand, sought to limit the underinsured motorist coverage to be implied by law to the amount of the insured's uninsured motorist coverage. Preferring to avoid an unlimited or "open-ended" remedy, the court held that the amount of increased coverage implied by law should equal the maximum amount of bodily injury liability limits available from the insurer at the time the offer was made. (Logsdon, 143 Ill. App. 3d at 964.) The court found it important that section 143a -- 2 was intended to protect consumers, and considered the maximum amount of coverage available from an insurer to be an appropriate remedy where the insurer failed to make a sufficient offer under the statute. Logsdon, 143 Ill. App. 3d at 961, 964.

The remedy adopted by the Logsdon court was rejected four months later by the fifth district in Fuoss v. Auto Owners (Mutual) Insurance Co. (1986), 148 Ill. App. 3d 526, 499 N.E.2d 539, aff'd (1987), 118 Ill. 2d 430, 516 N.E.2d 268. The appellate court in Fuoss reformed an insurance policy and implied underinsured motorist coverage in an amount equal to the bodily injury liability limits selected by the insured. Noting that bodily injury liability limits of $500,000/$1,000,000 commonly were available from insurers, it found the "limitation" on the remedy selected by the Logsdon court to be illusory. 148 Ill. App. 3d at 535.

This conflict between appellate court districts was resolved implicitly by our supreme court in its review of Fuoss. (Fuoss v. Auto Owners (Mutual) Insurance Co. (1987), 118 Ill. 2d 430, 516 N.E.2d 268 (Fuoss).) In Fuoss, the insured sought reformation of an insurance policy based on an alleged violation of section 143a -- 2, namely, the insurer's failure to offer underinsured motor vehicle coverage as part of his policy. The policy he purchased included bodily injury liability limits of $25,000/$50,000, and uninsured motorist insurance of $15,00/$30,000. The insured was injured in an automobile accident and eventually settled with the at-fault driver for $100,000, the maximum amount payable under the at-fault driver's policy. Seeking additional amounts from his own insurer to cover all damages from the accident, the insured sought to reform his policy to include underinsurance. The insured there filed an affidavit similar to plaintiff's affidavit here, to the effect that he would have purchased an amount ...


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