Car Insurance Limits Raised Due To Ineffective Rejection of UM Coverage
In Norris v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 760 N.E.2d 141 (Ill. App. 1st Dist. 2001), Tommy Norris was killed in a traffic accident while driving a truck owned by Jones Truck Lines. The driver of the other vehicle was uninsured. At the time of the accident, Norris owned an automobile insured through Allstate Insurance Company with $20,000 limits. Allstate paid these limits to the family of the decedent.
The truck owned by Jones Truck Lines was insured under a policy issued by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) with limits of $2 million per accident. This policy contained no UM coverage whatsoever. A declaratory action was brought by Norris’ survivors alleging the National Union policy should be reformed to include UM coverage in the amount of $2 million. National Union argued that if the policy was to be reformed, it should be reformed to the statutory minimum of $20,000 per person and $40,000 per occurrence.
The plaintiffs argued that where there has been an insufficient offer of UM coverage, the court should impose a level equal to the higher limits. The plaintiffs also alleged that the purported rejection by the truck owner of the excess UM coverage was invalid because the policy did not comply with Illinois law. National Union argued that it offered UM coverage up to the $2 million limit of the policy but that the owner made a knowing and intelligent rejection of that offer.
The Illinois UM statute provides that no policy of liability coverage for an automobile may be issued unless UM coverage is offered in an amount up to the insured’s bodily injury liability limits. In order to satisfy the requirements of this section, an offer of UM coverage must meet a four part test described in Colinger v. National Gen. Ins. Co., 109 Ill.2d 419 (1985). Under Colinger, an offer must (1) notify the insured in a commercially reasonable manner if the offer is not made in face‑to‑face negotiations; (2) specify the limits of the optional coverage without using general terms; (3) intelligibly advise the insured of the nature of the offer; (4) advise the insured that the optional coverage is available for a relatively modest premium increase. Here, the form offered by National Union indicated that the basic limits in Illinois were $30,000. The form also failed to identify the additional cost of the coverage. These errors created a situation as if no offer was made at all. Any purported rejection of this offer was not effective. Since the purported rejection was ineffective, the National Union policy was reformed by the court to reflect a higher UM limit equal to the $2 million liability limit of the policy.
