While Illinois law requires all drivers to carry liability insurance as a condition for driving a vehicle, many people violate the law and drive without insurance.  Which is why Illinois law also requires all car insurance companies to provide uninsured  / underinsured insurance coverage benefits to its customers. But in what amount?  What happens when a customer renews coverage or buys a new car?  The value of uninsured/underinsured motorist coverage becomes apparent following an auto accident with an uninsured or underinsured driver. That’s when you look to your UM/UIM coverage.

Uninsured  / Underinsured Motorist Insurance is Low Cost And Handy In a Serious Auto Accident.

Section 143a-2 of the Illinois Insurance Code provides that no policy of motorist insurance shall issue unless uninsured  / underinsured motorist coverage is included “in an amount equal to the insured’s liability limits, unless specifically rejected by the insured.” The insurance company must provide applicants with a description of the coverage and contain a space for indicating the rejection” of additional uninsured/underinsured motorist coverage” beyond the current statutory minimal amount of $25,000.  This means that if want to buy $100,000 of liability insurance, the company must offer you $100,000 in uninsured  / underinsured coverage.  If you chose to purchase LESS than this amount, you have to indicate your choice by initialing the insurance proposal. While keeping premium costs down is always important, keep in mind that the cost of UM/UIM insurance is low as compared with liability coverage. And can come in mighty handy in the event of a serious auto accident.

Cynthia Nicholson v State Farm Insurance Company

Take for instance the case of Cynthia Nicholson v State Farm Insurance Company: https://courts.illinois.gov/opinions/AppellateCourt/2010/2ndDistrict/March/2080639.pdf

In this auto accident case, the Janota family purchased insurance through State Farm Insurance Company beginning in 1988. They chose to buy a $100,000 liability policy, and $50,000 for um/uim coverage.  They signed the insurance proposal describing their rights and initialed the form indicating they sought less um/uim coverage than their liability coverage. They maintained this coverage annually until 1997, when they bought a new car.  Policy limits remained the same until September 14, 1999, when they contacted State Farm to increase their liability coverage to $250,000, and their um/uim limits to $100,000. This policy issued on September 17, 1999. For unknown reasons, the insurance form indicating their preference was not signed until November 6, 1999. On August 21, 2003, the Janotas bought another new car, continuing their former coverage. On November 19, 2003, Mr. and Mrs. Janota were killed in a car accident. The individual liable for the accident was uninsured. The executor of the Janota Estate, Cynthia Richardson, filed a claim against State Farm for $250,000, and when State Farm agreed to pay the estate only $100,000, filed suit against State Farm seeking to reform the Janota insurance policy to $250,000 for uninsured benefits.

Finding for the Janota Estate

In finding for the estate, the court stated:  “an insurer may not issue a policy with UM coverage limits lower than those for liability coverage unless the insurer has obtained a signed rejection. For a rejection to be effective, it must have been received before the policy was issued.” Since in this case, the rejection occurred after the policy issued (on November 6, a month and a half after the policy had issued), the policy which had been in effect since 1999 was reformed, i.e., changed in compliance with the law, and State Farm had to pay UM benefits of $250,000.

UM/UIM Coverage is a Good Value

It is important to understand that you cannot buy more UM/UIM coverage than your liability limits.  In other words, you can’t attempt to keep your insurance premium down in buying a $25,000 liability policy, while at the same time trying to protect yourself against an at-fault driver who was either uninsured, or had minimal insurance by purchasing UM/UIM coverage greater than $25,000.  The small additional cost of maintaining liability and UM/UIM coverage in the same amounts will become apparent should you be unfortunate enough to be involved in a serious auto accident with someone with limited or no insurance.