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08/29/97 KIRK ROBERTS v. NORTHLAND INSURANCE CO.

August 29, 1997

KIRK ROBERTS, PLAINTIFF-APPELLEE,
v.
NORTHLAND INSURANCE CO., DEFENDANT-APPELLANT, AND CHICAGO MOTOR CLUB INSURANCE CO., DEFENDANT-APPELLANT, AND GREAT WEST CASUALTY CO., DEFENDANT.



Appeal from the Circuit Court of the 10th Judicial Circuit, Peoria County, Illinois. No. 96--MR--16. Honorable Richard E. Grawey Judge, Presiding.

Released for Publication October 22, 1997.

Present - Honorable Thomas H. Homer, Justice, Honorable Peg Breslin, Justice, Honorable John F. Michela, Justice. Justice Michela delivered the Opinion of the court. Breslin, J., concurs; Homer, J., partially concurs and partially dissents.

The opinion of the court was delivered by: Michela

The Honorable Justice MICHELA delivered the Opinion of the court:

In January 1996, plaintiff filed a declaratory judgment action in the circuit court of Peoria County. He sought a determination of the amount of set-off to be applied to underinsured motorist coverage in two separate insurance policies issued to him by Northland Insurance Co. (Northland) and Chicago Motor Club Insurance Co. (CMCI). In a consolidated appeal, the companies contend that the court erred in finding that only CMCI was entitled to exclusive set-off of $196,114.26 in net workers' compensation benefits (WC benefits); and in finding that a setoff for social security disability benefits (SSD benefits) is not allowable as a matter of public policy.

Facts

In December 1993, while driving a semi-trailer truck for his employer, plaintiff was involved in a motor vehicle accident with Thomas Fortune (Fortune), an underinsured motorist. Plaintiff was insured by defendants Northland, CMCI, and Great West Casualty Co. (GWC). Each provided underinsured motorist coverage in the respective amounts of $500,000, $300,000, and $20,000.

Plaintiff received the following: a $50,000 limit from Fortune's liability policy; a settlement from GWC, who was voluntarily dismissed; $246,114.26 in WC benefits, which was reduced by the $50,000 received from Fortune, for a net benefit of $196,114.26; and SSD benefits of $301 per month commencing in June 1994 and increasing to $324 per month in December 1994.

Northland and CMCI's policies were similar in that each provided that their limits for underinsured motorist coverage were to be reduced by any amounts received from a tortfeasor, WC benefits, disability benefits or similar law. The companies claim that they are each entitled to a set-off for the money received from Fortune, WC benefits, and SSD benefits. Plaintiff asserts that defendants are jointly entitled to only one set-off for the net WC benefits and that it should be applied to CMCI, the primary carrier, or that the single set-off should be prorated between Northland and CMCI.

The circuit court found and ordered that only CMCI was entitled to a set-off for the net WC benefits of $196,114.26 and that policy provisions allowing a set-off for SSD benefits were against public policy. Defendants' consolidated appeal follows.

Analysis

The legislative intent in providing for underinsured motorists is to place the insured in the position he would have been in had he been injured by a motorist who carried liability insurance in the same amount as his underinsured motorists coverage. Sulser v. Country Mutual Insurance Co., 147 Ill. 2d 548, 555, 169 Ill. Dec. 254, 591 N.E.2d 427 (1992).

The limits of underinsured motorist coverage are the difference between the amount plaintiff receives from a bodily injury liability policy and the stated limit for the underinsured motorist coverage. Illinois Insurance Code (the Code) 215 ILCS 5/143a--2(4) (West 1996); Chester v. State Farm Mutual Automobile Insurance Co., 227 Ill. App. 3d 320, 327, 169 Ill. Dec. 315, 591 N.E.2d 488 (1992).

This court in Adolphson v. Country Mutual Insurance Co., 187 Ill. App. 3d 718, 721, 135 Ill. Dec. 397, 543 N.E.2d 965 (3d Dist. 1989) held that the limits of coverage refer to the highest amount which the insurer providing underinsured motorist coverage must pay. This court noted, "the statute does not set a minimum, or floor, but rather a maximum, or ceiling; nothing in the statute prevents the insurer from reducing ...


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