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Lee v. John Deere Insurance Company

December 04, 2003


The opinion of the court was delivered by: Justice Kilbride


Docket No. 95337-Agenda 27-September 2003.

In this case we must decide whether the failure of an insurance company to comply strictly with the statutory requirement that it provide a space in its motor vehicle coverage application form for the applicant to sign or initial indicating a decision to reject uninsured-motorist coverage operates to impose underinsured-motorist coverage in an amount equal to the bodily injury liability limits. In a declaratory judgment action brought by the estate of plaintiff killed in an accident, the circuit court answered that question in the affirmative and reformed the issued policy to provide underinsured-motorist insurance coverage equal to the bodily injury liability limits. The appellate court reversed and remanded. 334 Ill. App. 3d 807, 815. We granted leave to appeal. 177 Ill. 2d R. 315. We allowed the National Association of Independent Insurers leave to file a brief as amicus curiae in support of defendant John Deere Insurance Company. 155 Ill. 2d R. 345. We now reverse the judgment of the appellate court.


In September 1994, Andy W.Y. Lin (Lin), president of Asia Distributors (Asia), a trucking firm, sought motor vehicle liability insurance coverage for Asia's delivery trucks through Elite Insurance Agency, Inc. (Elite), an insurance brokerage firm. Lin telephoned Michael Amwoza, president of Elite, and asked him to secure a coverage quote. He did not personally go to Elite's office and did not sign an application form. Elite sought a coverage quote from International Risk Placement (IRP), an agent for John Deere Insurance Company (Deere). After receiving the quote, Elite prepared a form entitled "Non-Fleet Transportation Application" based on information supplied by Lin. Amwoza submitted the completed form to IRP. The application form contained no signature line for the person or entity seeking coverage and contained no space for the applicant to indicate rejection of additional uninsured-motorist coverage as required by the Illinois Insurance Code (Insurance Code) (215 ILCS 5/143a-2 (West 1992)). Amwoza testified in a deposition that he explained to Lin his right to purchase uninsured and underinsured insurance coverage in an amount equal to the bodily injury liability limits and advised him of the changes in the premium. According to Amwoza, Lin did not wish to pay for the increased coverage. Lin denied that anyone had explained the coverage option to him.

On September 8, 1994, in accordance with Deere's custom, IRP as Deere's agent, issued a temporary binder of coverage to Asia, effective September 2, 1994. The temporary binder provided bodily injury liability coverage in the amount of $1 million and uninsured/underinsured-motorist coverage with aggregate limits of $40,000. On that same date, IRP forwarded to Elite another form entitled "John Deere Insurance Company Selection/Rejection of Uninsured/Underinsured Motorist coverage-Illinois." This selection/rejection form was submitted to and filed by the Illinois Director of Insurance in 1992. It was designed to comply with the provision in the Insurance Code requiring insurance companies to describe briefly the uninsured-motorist coverage and to include a space indicating the applicant's rejection of that coverage in an amount equal to the bodily injury liability limit.

On September 12, 1994, Deere issued its insurance policy containing coverage identical to that described in the temporary binder, even though it had not yet received the selection/rejection form back from Elite. Deere then notified IRP that it had not yet received the signed selection/rejection form from Asia. IRP notified Elite that the signed form must be returned by October 28, 1994, or the policy would be canceled. A signed form was returned to IRP by Elite and in turn sent to Deere.

Deere canceled the policy for nonpayment of premium on November 17, 1994. Asia operated without coverage from that date until January 20, 1995, when a new policy was issued to reinstate coverage with Deere. Again, IRP sent a selection/rejection form to Elite, and again a signed form was returned to IRP by Elite only after Deere demanded it on threat of cancellation. This form was purportedly signed by Andy Lin, although Lin denied that the signature was his. The premium for the uninsured/underinsured coverage was based on the statutory minimum limits. The policy was renewed for the year 1996 and was in force on March 1, 1996. On that date, plaintiff's decedent Tak Kwon Lee, one of Asia's drivers, was killed in a collision between his delivery truck and a car.

The driver of the car was at fault, and that insurance carrier paid its $20,000 policy limit to Vuong Lee, the decedent's widow. Lee then made an underinsured-motorist claim against Deere. Because the parties could not agree on the amount of available coverage, Lee filed a declaratory judgment action in the circuit court of Cook County against Deere seeking a determination of the amount of coverage. Lee moved for summary judgment, contending that the application form lacked the required space for rejection of increased uninsured/underinsured coverage and thus violated section 143a-2(2) of the Insurance Code. Lee further argued that the separate selection/rejection form was ineffective. The trial court granted summary judgment, finding that the application had no signature or initials indicating rejection of the additional coverage. The trial court then reformed the insurance policy to provide $1 million in underinsured-motorist coverage. The court did not address the validity or effect of the selection/rejection form.

Deere appealed, and the appellate court reversed, holding that the trial court misapplied the statute. 334 Ill. App. 3d at 808. Deere argued that its selection/rejection form was part of an ongoing application process and that the form complied with the statutory requirements. The reviewing court did not reach the question of compliance. Instead, it determined sua sponte that section 143a-2(2) applied only to uninsured-motorist coverage and not to underinsured-motorist coverage. Accordingly, the court held that since Lee's claim against Deere was for underinsured coverage, the application and signature requirements of the statute were both inapplicable and irrelevant. 334 Ill. App. 3d at 814.


On appeal to this court, Lee argues that the appellate court misinterpreted the statute, claiming that uninsured- and underinsured-motorist coverages are linked together and that application procedures applicable to the former also apply to the latter. Because the question of the proper interpretation to be afforded statutory provisions is a question of law, our standard of review is de novo. Knolls Condominium Ass'n v. Harms, 202 Ill. 2d 450, 454 (2002). The plain language of the statute is the best indicator of the legislature's intent. Allstate Insurance Co. v. Menards, Inc., 202 Ill. 2d 586, 591 (2002). When the statute's language is clear, it will be given effect without resort to other aids of statutory construction. Petersen v. Wallach, 198 Ill. 2d 439, 445 (2002).

Section143a of the Insurance Code (215 ILCS 5/143a (West 1992)) mandates uninsured-motorist coverage in an amount equal to the $20,000/$40,000 minimum liability limits for bodily injury or death required by section 7-203 of the Illinois Vehicle Code (625 ILCS 5/7-203 (West 1992)).

Section 143a-2 of the Insurance Code (215 ILCS 5/143a-2 (West 1992)) sets out conditions and procedures for issuing or rejecting both uninsured- and underinsured-motorist coverage. Subsection (1) of section 143a-2 requires the insurance company to provide uninsured-motorist coverage in an amount equal to the bodily injury coverage unless specifically rejected by the insured and also requires the company to provide a brief description of the coverage and to advise applicants of their right to reject coverage in excess of the amounts required by section 7-203 of the Illinois Vehicle Code. 215 ILCS 5/143a-2(1) (West 1992).

Subsection (2) of section 143a-2 prescribes an exclusive means of effecting a rejection of additional coverage, ...

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