Appeal from Circuit Court of Greene County. No. 93L31. Honorable James W. Day, Judge Presiding.
Released for Publication February 23, 1996. As Corrected March 20, 1996. As Corrected August 9, 1996.
Honorable James A. Knecht, J., Honorable Robert W. Cook, P.j., Honorable Frederick S. Green, J., Concurring. Justice Knecht delivered the opinion of the court: Cook, P.j., and Green, J., concur.
The opinion of the court was delivered by: Knecht
The Honorable Justice KNECHT delivered the opinion of the court:
The trial court held former section 143a-2(1) of the Illinois Insurance Code (Code) (Ill. Rev. Stat. 1989, ch. 73, par. 755a-2(1)) required an offer of additional uninsured motorist (UM) coverage be made to all named insureds under a policy. We reverse and hold a legally sufficient offer made to one named insured satisfied the offer requirement of section 143a-2(1).
In January 1990, Richard Messerly contacted State Farm Insurance (State Farm) agent Jerry Marcacci to procure automobile insurance for himself and his wife, Rhonda, the plaintiff in this action. Richard met with Marcacci at his office to discuss the coverage he wanted and to fill out an application for insurance. The evidence established Marcacci's custom was to spend approximately 30 to 45 minutes discussing the various types and terms of coverage available to applicants, including UM coverage, and he followed this procedure with Richard. According to the evidence, the cost of insurance was a concern of Richard's and at the meeting Richard told Marcacci he wanted the lowest amounts of coverage possible. Therefore, Richard's application reflected a request for UM coverage equal to the statutory minimum required by the Code.
Due to several factors, Marcacci was not able to obtain insurance for the Messerlys with State Farm but arranged for a policy to be issued by the Chubb Group until such time as they qualified for coverage with State Farm. In approximately June 1990, Marcacci contacted the Messerlys by mail to inform them they were qualified to receive coverage under State Farm. On June 2, 1990, Richard went to Marcacci's office once again and filled out a new application for insurance, requesting higher bodily injury liability limits but not increasing the levels of UM coverage.
In fact, when Richard applied for coverage in June 1990, he signed two declination forms (one for each car belonging to the family) which stated he had been offered and chose to reject the option of purchasing additional UM coverage and instead selected limits of $20,000/$40,000. As a result of the June 1990 application, the Messerlys obtained insurance coverage with State Farm which they maintained up to and beyond October 1992. In October 1992, plaintiff was involved in an accident with an uninsured motorist and incurred in excess of $50,000 in medical bills.
Plaintiff filed suit seeking a declaratory judgment, asking the court to find defendant did not comply with section 143a-2 of the Code since it failed to adequately communicate an offer of additional UM coverage to plaintiff, Rhonda, and such failure caused plaintiff to be without sufficient motor vehicle coverage. Plaintiff asked the court to order a reformation of the insurance contract to reflect levels of UM coverage equal to those of her bodily injury liability limits.
The trial court found Marcacci had made a legally sufficient offer of UM coverage to Richard Messerly. However, the court held defendant was required under the statute to make an offer of UM coverage to every named insured under the policy. The court granted plaintiff's prayer for relief, reforming the insurance contract to provide UM coverage of $50,000, an amount equal to the level of bodily injury liability coverage limits of the policy.
At issue is whether section 143a-2 of the Code required an offer of additional UM coverage be made to every named insured under a policy, or whether a legally sufficient offer made to one named insured satisfied the offer requirement.
Many States, including Illinois, have enacted legislation which makes UM coverage mandatory. (1 A. Widiss, Uninsured and Underinsured Motorist Coverage § 2.5, at 29 (2d ed. 1992).) In Illinois, UM insurance must be included in all motor vehicle liability policies issued or delivered. (See Ill. Rev. Stat. 1989, ch. 73, par. 755a-2, (now 215 ILCS 5/143a-2 (West 1994)).) In addition, most UM statutes provide for optional purchases by insureds of UM coverage limits in excess of the basic limits prescribed by statute. 2 I. Schermer, Automobile Liability Insurance § 36.05, at 36-40 (3d ed. 1995).
As of January 1990, Illinois law imposed an affirmative duty upon insurers to offer additional UM coverage when renewing, issuing or delivering automobile liability policies. The applicable statutory language stated: "no policy *** shall be renewed or delivered or issued for delivery *** unless coverage *** is offered in an amount up to the insured's bodily injury liability limits." (Emphasis added.) (Ill. Rev. Stat. 1989, ch. 73, par. 755a-2(1).) The statute also required insurers to offer underinsured motorist (UDIM) coverage: "Any offer made under subsection (1) of this Section shall also include an offer of coverage." (Ill. Rev. Stat. 1989, ch. 73, par. 755a-2(3).) Purchasers of auto liability insurance were permitted to reject offers of additional coverage, but such rejections had to be knowing and intelligent, based upon a comprehensible explanation by the insurer of the terms and nature of the coverage. Tucker v. Country Mutual Insurance Co. (1984), 125 Ill. App. 3d 329, 465 N.E.2d 956, 80 Ill. Dec. 610.
The Supreme Court of Illinois developed guidelines with respect to these offers in Cloninger v. National General Insurance Co. (1985), 109 Ill. 2d 419, 425-26, 488 N.E.2d 548, 550, 94 Ill. Dec. 549, where it set forth the components of a legally sufficient offer of UDIM and, by implication, UM coverage. Cloninger echoed Tucker, emphasizing the importance of conveying an explanation of UM/UDIM coverage sufficient to allow the ...