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Nila v. Hartford Insurance Company of the Midwest

April 12, 2000

SHARON NILA AND DEBORAH KUYKENDALL, AS CO-EX'RS OF THE ESTATE OF PATRICIA SCARFF, DECEASED, AND JENNIFER MYRA, PLAINTIFFS-APPELLEES,
v.
HARTFORD INSURANCE COMPANY OF THE MIDWEST, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Kane County. No. 97--MR--369 Honorable Patrick J. Dixon, Judge, Presiding.

The opinion of the court was delivered by: Justice Colwell

Defendant, Hartford Insurance Company of the Midwest (Hartford), appeals an order of the circuit court of Kane County granting summary judgment in favor of plaintiffs, Sharon Nila and Deborah Kuykendall, as co-executors of the estate of Patricia Scarff, and Jennifer Myra. The circuit court found that an automobile insurance policy delivered to Patricia did not include uninsured motorist coverage in an amount equal to the insured's bodily injury liability limits as required by section 143a-2 of the Illinois Insurance Code (Code) (215 ILCS 5/143a-2 (West 1994)) and that Patricia never specifically rejected uninsured motorist coverage equal to the liability limits of the policy. Therefore, the court reformed the policy to provide uninsured motorist coverage equal to the bodily injury liability limits of the policy.

On appeal, we must determine whether a surviving wife is bound by her deceased husband's initial rejection of additional uninsured motorist coverage where the insurer later issues an automobile liability policy to the surviving wife as the sole named insured for a term beyond the husband's last policy renewal.

I. BACKGROUND

In January 1987, Raymond Scarff contacted Hartford to procure information regarding the insurer's automobile insurance program with the American Association of Retired Persons (AARP). At the time, Raymond resided with his wife, Patricia. Hartford sent Raymond a quotation package in the mail. The quotation package contained a cover letter, a quotation, a sheet entitled "Your Choices in Illinois," an application, and a special credits certification form. The quotation listed four different coverage limits for each category of coverage along with their corresponding annual premiums. Information regarding the nature of uninsured motorist coverage was located on the reverse side of the quotation page as well as on the sheet entitled "Your Choices in Illinois."

The back of the application contained space for the applicant to select a payment plan and the desired amount of basic coverage, uninsured/underinsured motorist coverage, and uninsured motorist property damage coverage. The uninsured/underinsured motorist coverage selection section provided:

"UNINSURED/UNDERINSURED MOTORISTS COVERAGE

Uninsured Motorists/Underinsured Motorists Coverage is required in Illinois. Uninsured Motorist Property Damage Coverage is optional. The choice that you make below will apply to any policy which renews, extends, changes, supercedes or replaces your existing policy or any policy for which you may be applying.

* Maximum amount available (an amount equal to the liability limit of your policy)

y The following specific amount $_____

y Minimum amount available."

Raymond selected bodily injury limits of $100,000 per person and $300,000 per occurrence ($100,000/$300,000), and he opted for the minimum amount of uninsured/underinsured motorist coverage. Raymond signed and dated the application and submitted it to Hartford.

Hartford issued policy No. 55PHA501263 effective March 1, 1987. The policy contained bodily injury liability limits of $100,000/$300,000 and uninsured/underinsured motorist limits of $15,000 per person and $30,000 per occurrence ($15,000/$30,000). Raymond was the named insured under the policy while both Raymond and Patricia were listed as drivers. The policy defined the terms "you" and "your" as used in the policy to include the named insured and "[t]he spouse if a resident of the same household [as the named insured]." Attached to the policy as an endorsement was a "Lifetime Continuation Agreement," in which Hartford promised to renew the policy as long as the insured satisfied certain requirements.

Raymond renewed the policy annually effective March 1 of the years 1988, 1989, 1990, 1991, 1992, 1993, and 1994. The uninsured motorist coverage under Raymond's policy was increased to $25,000 per person and $50,000 per occurrence effective March 1, 1988. However, uninsured motorist coverage was decreased to $20,000 per person and $40,000 per occurrence ($20,000/$40,000) with the policy effective March 1, 1990. Raymond died on April 9, 1994.

Following Raymond's death, an endorsement to the policy effective April 19, 1994, deleted Raymond as a driver and changed Patricia's marital status to widowed. An endorsement effective July 9, 1994, replaced coverage for a 1989 Chrysler with coverage for a 1995 Plymouth. An endorsement effective July 18, 1994, replaced Raymond with Patricia as the named insured on the policy.

Thereafter, Patricia purchased a one-year policy of insurance from Hartford effective March 1, 1995. Patricia did not complete an application for the policy, and the policy was assigned the same number as the policy initially issued to Raymond. Further, the policy had the same bodily injury liability limits ($100,000/$300,000) and uninsured motorist limits ($20,000/$40,000) as the policy renewed by Raymond on March 1, 1994. Patricia renewed the policy for a one-year term effective March 1, 1996. It is uncontested that ...


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