Permissive Passenger in a Vehicle is not an Insured and not Entitled to Underinsured Motorist Coverage under an Umbrella Policy
In Pang v. Farmers Insurance Group, Mei Pang (“Pang”) sustained an injury as a passenger in a vehicle operated by Ingred Chan when a collision occurred with a vehicle operated by Donald McGinnis (“McGinnis”), an underinsured motorist. McGinnis’s insurer paid Pang $100,000 to settle her claim. At the time of the collision, Ingrid Chan and her husband, Ezra Chan, (“Chans”) were the named insureds on a special umbrella policy issued to them by Farmers Insurance (“Farmers”). Shortly thereafter, while the underlying claims related to the collision were pending, Farmers’ underwriting supervisor, Dwight Hoskins, provided a reconstructed copy of the Chans’ umbrella policy with an affidavit certifying its authentication. The record suggests that the Chans no longer possessed the original policy; and thus, Farmers reconstructed the policy based on its records, a common practice in insurance disputes. More than eight years after the incident, Pang filed a complaint for UIM coverage under both the umbrella policy issued by Farmers and a primary auto insurance policy issued to the Chans by another insurer, Mid-Century Insurance Company (“Mid-Century”). Mid-Century immediately settled Pang’s claim for $150,000.
Farmers denies coverage under the umbrella policy because Pang did not fall within the umbrella policy’s definition of “insured.” The umbrella policy explicitly defined “insured” to cover: (1) the named insureds (the Chans); (2) the named insureds’ relatives by blood, marriage or adoption; or (3) any person under the age of 21 in the care of the named insureds. In addition to denying coverage, Farmers filed a counterclaim for declaratory relief, seeking a declaration of no coverage. Pang also filed a declaratory action and was granted leave to file an amended complaint in which she alleged that she was legally entitled to UIM coverage under the umbrella policy because she was a permissive passenger in the Chans’ vehicle.
The court reviewed whether a passenger in a vehicle is an insured and entitled to UIM coverage under an umbrella policy.
Under Illinois law, umbrella policies and primary auto policies are distinct policies. An umbrella policy is intended to protect the insured against excess judgment, and the risks and premiums are calculated accordingly. Under Section 143a-2(5) of the Illinois Insurance Code (Code), insurers may, but are not required to, provide uninsured or underinsured motorist (UM/UIM) coverage in umbrella policies. 215 ILCS 5/143a-2(5) (West 2010). An umbrella policy does not provide the same type of coverage as an automobile policy and consequently falls outside the scope of Illinois UIM insurance laws. The plain meaning of the umbrella policy at issue here does not provide UIM benefits to permissive passengers. The policy clearly defines “insured” as: (1) the named insureds; (2) the named insureds’ relatives by blood, marriage or adoption; or (3) any person under the age of 21 in the care of the named insureds.
Pang v. Farmers Ins. Grp., 2014 IL App (1st) 123204.
