Ill. High Court Backs Policy’s Time Limit for UM Coverage Claim

The Illinois Supreme Court recently handed down a ruling that upheld an Illinois auto insurance policy’s two-year statute of limitations for taking legal action against an insurer over an accident claim even though the accident happened in Wisconsin, where the statute of limitations is three years.

The ruling in the case, posted on the court’s website in late November, stemmed from a July 2007 crash in which Illinois motorist Terri Whitehead was hurt in a crash with an uninsured motorist in Wisconsin.

According to Country Preferred, the insurer that issued Whitehead’s uninsured motorist policy, Whitehead’s first written UM settlement demand was not until October 2009, outside of the contract’s two-year deadline, which it believed “time-barred [her] from ever making an uninsured-motorist claim under the policy.”

Whitehead said that she had filed a claim before the deadline.

The circuit court ultimately sided with Country Preferred, saying Whitehead did not make her first claim until October 2009. This led to an appeal from Whitehead in which she argued that she should be held to Wisconsin’s legal standard of a three-year statute of limitations; Illinois’ statute of limitations is two years.

The appeals court sided with Whitehead, saying that her insurance policy’s two-year time limit “violates public policy” in Wisconsin.

“It effectively shortens the applicable Wisconsin statute of limitations from three years to two years,” the appeals court stated in court documents about the insurance policy contract.

Supreme Court Sides with Home State, Contractual Deadlines

Country Preferred appealed the decision to the Illinois Supreme Court, which filed its decision in October. That decision overturned the appeals court ruling, finding that the deadline stated in the policy contract should be adhered to when weighed against similar state deadlines.

The high court’s justices ruled 7-1 in favor of Country Preferred, with the majority rejecting Whitehead’s contention that she be held to Wisconsin’s longer statute of limitations and noting that her policy’s time limit mirrored her home state’s deadlines.

“We see no reason why Wisconsin’s policy determinations should control the result in this case,” the court stated. “[T]he contractual limitation period in the parties’ insurance contract does correspond with the limitation period our Legislature has deemed appropriate.”

The ultimate question, according to court documents, becomes whether the two-year contractual deadline affords the policyholder “sufficient time” to begin pursuing settlement. To that end, Whitehead had “failed to explain why she could not have properly initiated dispute resolution procedures within the contractual limitation period of two years,” the justices stated.

“Nothing of record indicates that Whitehead lacked information necessary to pursue her claim against Country Preferred in a timely manner or that she was legally incompetent to do so,” according to the court.

Insurer was ‘Unfair’ in Known Coverage Risks, Dissenting Justice Says

Chief Justice Thomas L. Kilbride was the lone dissenting vote, and wrote in his opinion that he believed that Country Preferred unjustly pursued a shorter statute of limitations to cover its own known risk in UM coverage.

“The insurance company is well aware of the risk that its insured may become involved in an accident while traveling in a state that has a three-year statute of limitations, including Wisconsin,” Kilbride stated in his opinion. “[I] believe it is fundamentally unfair that the insurance company accepts insurance premiums and then attempts to limit its liability by use of a limitation provision shorter than the statutory period of states where its insured may travel.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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