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Appellate Court Affirms Summary Judgment in Favor of Insurer in Underinsured Motorist Coverage Dispute

September 18, 2018

The First District Appellate Court affirmed summary judgment in favor of an insurer (Johnson & Bell’s client) in a dispute about the amount of coverage available as part of an Underinsured Motorist claim. The insured claimed that our client had waived its right to assert setoffs and sought payment of the insurer’s full $1 million limits. Johnson & Bell argued that setoffs in the amount of over $315,000 were applicable for amounts already paid to the insured in his third-party case against the at-fault driver and for amounts already paid by the insurer as a workers’ compensation settlement.

The court held that the language that the insurer would “waive its rights to recovery in your third party case” in the insurer’s workers’ compensation settlement offer was not sufficient to constitute a waiver of setoffs under the insurance policy’s UIM coverage. Rather, the court held, the insurer was waiving its lien rights it held in the insured’s third-party case against the at-fault driver pursuant to the Workers’ Compensation Act.

The court also held that the insurer’s waiver was not illusory because the insurer actually waived something -- its right to recover from amounts awarded in the insured’s case against the at-fault driver under Section 5(b) of the Workers’ Compensation Act. Finally, the court held that the insured’s recovery under the UIM policy did not violate Illinois public policy because an insurer is allowed to reduce the limits of a UIM Policy by amounts paid to the insured in third-party actions and in workers’ compensation claims.

The decision ultimately saved the insurer over $315,000, the amount of the applicable setoffs.

Johnson & Bell Shareholders, Glenn F. Fencl, and Garrett L. Boehm, Jr., handled the appeal.


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