Illinois Farmers Insurance Co. v. Cisco

Illinois Farmers Insurance Co. v. Cisco, Nos. 80980, 81043 cons.

NOTICE: Under Supreme Court Rule 367 a party has 21 days after
the filing of the opinion to request a rehearing. Also, opinions
are subject to modification, correction or withdrawal at anytime
prior to issuance of the mandate by the Clerk of the Court.
Therefore, because the following slip opinion is being made
available prior to the Court's final action in this matter, it
cannot be considered the final decision of the Court. The
official copy of the following opinion will be published by the
Supreme Court's Reporter of Decisions in the Official Reports
advance sheets following final action by the Court.

Docket Nos. 80980, 81048 cons.--Agenda 9--January 1997.
ILLINOIS FARMERS INSURANCE COMPANY, Appellant, v. GLORIA CISCO, Appellee.--
CHARLES SHANE, Appellee, v. ILLINOIS FARMERS INSURANCE COMPANY, Appellant.
Opinion filed September 11, 1997.

JUSTICE MILLER delivered the opinion of the court:
In these consolidated cases, Richard Cisco and Charles Shane were
involved in separate motor vehicle accidents with uninsured motorists. Cisco
and Shane were driving vehicles owned by their respective employers. The
vehicles being driven by Cisco and Shane were insured by their employers
under policies of motor vehicle insurance providing uninsured-motorist
benefits in the amounts of $20,000 per person and $40,000 per occurrence, the
minimums required under section 143a of the Illinois Insurance Code (Ill.
Rev. Stat. 1989, ch. 73, par. 755a) and section 7--203 of the Illinois
Vehicle Code (Ill. Rev. Stat. 1989, ch. 95«, par. 7--203). Cisco's estate and
Shane sought to collect additional uninsured-motorist benefits under
automobile insurance policies issued to them on their personal vehicles by
Illinois Farmers Insurance Company. In both cases, Illinois Farmers denied
coverage based on an uninsured-motorist coverage exclusion.
The appellate court, in each case, found that Illinois Farmers'
exclusionary language violated section 143a--2(1) of the Insurance Code (Ill.
Rev. Stat. 1989, ch. 73, par. 755a--2(1)). Section 143a--2(1) provides:
"No policy insuring against loss resulting from liability
imposed by law for bodily injury or death suffered by any person
arising out of the ownership, maintenance or use of a motor vehicle
shall be renewed or delivered or issued for delivery in this State
with respect to any motor vehicle designed for use on public
highways and required to be registered in this State unless
uninsured motorist coverage as required in Section 143a of this
Code is offered in an amount up to the insured's bodily injury
liability limits." Ill. Rev. Stat. 1989, ch. 73, par. 755a--2(1).
In Cisco's case, the appellate court affirmed the trial judge's ruling
in favor of Cisco's estate. 278 Ill. App. 3d 1022. In Shane's case, the
appellate court reversed the trial judge's grant of summary judgment in favor
of Illinois Farmers. No. 1--95--1870 (unpublished order under Supreme Court
Rule 23). Thus, the appellate court's rulings allowed Cisco's estate and
Shane to collect uninsured-motorist benefits under the policies issued by
Illinois Farmers.
Illinois Farmers filed a petition for leave to appeal in each case. 155
Ill. 2d R. 315(a). We allowed both of Illinois Farmers' petitions and
consolidated them for purposes of this appeal. We affirm the judgments of the
appellate court.

BACKGROUND
Cause No. 80980
In cause No. 80980, Richard Cisco was fatally injured in a motor vehicle
accident involving an uninsured motorist. The vehicle driven by Cisco was
owned by his employer and insured under a policy issued by the Insurance
Company of North America (INA). The INA policy provided uninsured-motorist
benefits of $20,000 per person and $40,000 per occurrence. INA paid Cisco's
estate $20,000 in uninsured-motorist benefits as a result of Cisco's death.
At the time of the accident, Cisco and his wife, Gloria, were insured
under automobile insurance policies issued by Illinois Farmers for the two
vehicles owned by the Ciscos. Each policy provided bodily injury liability
coverage and uninsured-motorist coverage in the amounts of $100,000 per
person and $300,000 per occurrence. Gloria, on behalf of Richard's estate,
sought uninsured-motorist benefits from Illinois Farmers under the policies.
Illinois Farmers denied coverage based on paragraph 4 of the policies' "Other
Insurance" provision. Each policy contains the following pertinent language:
"PART II--UNINSURED MOTORIST
Coverage C--Uninsured Motorist Coverage
(Including Underinsured Motorist Coverage)
We will pay all sums which an insured person is legally
entitled to recover as damages from the owner or operator of an
uninsured motor vehicle because of bodily injury sustained by the
insured person. The bodily injury must be caused by accident and
arise out of the ownership, maintenance or use of the uninsured
motor vehicle.
* * *
Other Insurance
* * *
4. We will not provide insurance for a vehicle other than your
insured car, unless the owner of that vehicle has no other
insurance applicable to this part."
Illinois Farmers, as plaintiff, filed a declaratory judgment action in
the circuit court of Cook County against defendant, Gloria Cisco, seeking a
declaration of Illinois Farmers' rights and liabilities under the two
automobile insurance policies. The parties filed cross-motions for judgment
on the pleadings. The trial judge denied Illinois Farmers' motion and granted
Gloria Cisco's motion. Illinois Farmers appealed.
The appellate court affirmed. 278 Ill. App. 3d 1022. The appellate court
explained that under section 143a--2(1) Illinois Farmers was required to
offer the Ciscos uninsured-motorist benefits of $100,000 per person and
$300,000 per occurrence because these were the limits of the Ciscos' bodily
injury liability coverage. The Ciscos accepted the offer of uninsured-
motorist benefits in excess of the minimums required by section 143a of the
Insurance Code and section 7--203 of the Vehicle Code. Given the Ciscos'
acceptance of this offer, the appellate court found that Illinois Farmers
could not condition the availability of uninsured-motorist coverage under its
policy on "the total lack of uninsured motorist coverage on the vehicle in
which the insured [was] riding when injured." 278 Ill. App. 3d at 1026.
The appellate court stated the Ciscos' case was distinguishable from the
cases relied on by Illinois Farmers. Illinois Farmers relied on Vanek v.
Illinois Farmers Insurance Co., 268 Ill. App. 3d 731 (1994), Shefner v.
Illinois Farmers Insurance Co., 243 Ill. App. 3d 683 (1993), Nationwide
Mutual Insurance Co. v. Hecker, 183 Ill. App. 3d 13 (1989), and on remand and
reconsideration, Luechtefeld v. Allstate Insurance Co., 167 Ill. 2d 148
(1995). In these cases, the insured in question owned multiple vehicles and
obtained insurance coverage for the vehicles. In each case, at least one of
the vehicles owned by the insured had a lower level of uninsured-motorist
benefits than did the insured's other vehicles. The insured was injured by an
uninsured motorist while the insured was occupying one of the owned vehicles
covered by a lower level of benefits. The insured in each case attempted to
claim a higher level of benefits under one of the policies of insurance
covering a vehicle not involved in the accident.
The courts in Luechtefeld, Vanek, Shefner, and Hecker found that the
uninsured-motorist coverage under the policy purchased for the vehicle
involved in the accident applied. Thus, the insured in question received the
level of uninsured-motorist benefits selected for the particular vehicle the
insured occupied when injured by an uninsured motorist. See Luechtefeld, 167 Ill. 2d 148; Vanek, 268 Ill. App. 3d 731; Shefner, 243 Ill. App. 3d 683;
Hecker, 183 Ill. App. 3d 13. The appellate court found the Ciscos' case
distinguishable. The appellate court stated that unlike the insureds in
Luechtefeld, Vanek, Shefner, and Hecker, the Ciscos did not own the vehicle
in which the injury occurred and did not choose the level of uninsured-
motorist benefits for the vehicle in which the injury occurred. 278 Ill. App.
3d at 1027-28.
Illinois Farmers filed a petition for leave to appeal. 155 Ill. 2d R.
315(a). We allowed Illinois Farmers' petition and consolidated it with cause
No. 81048.

Cause No. 81048
In cause No. 81048, Charles Shane was injured in a motor vehicle
accident involving an uninsured motorist. The vehicle driven by Shane at the
time of the accident was owned by his employer and insured under a policy
issued to his employer by Casualty Insurance Company. The Casualty Insurance
policy provided uninsured-motorist benefits of $20,000 per person and $40,000
per occurrence. As a result of the collision, Casualty Insurance paid Shane
$20,000 in uninsured-motorist benefits.
At the time of the accident, Shane was insured under a personal
automobile insurance policy issued by Illinois Farmers. The policy provided
bodily injury liability coverage and uninsured-motorist coverage in the
amounts of $100,000 per person and $300,000 per occurrence. Believing that
his damages exceeded $20,000, Shane presented an uninsured-motorist claim to
Illinois Farmers. Illinois Farmers denied coverage based on paragraph 4 of
the policy's "Other Insurance" provision. (The relevant policy language is
identical to that quoted above in reference to Cisco's case, cause No.
80980.)
Shane, as plaintiff, filed an action in the circuit court of Cook County
against defendant, Illinois Farmers, seeking a declaration of coverage for
uninsured-motorist benefits. The parties filed cross-motions for summary
judgment. The trial judge granted summary judgment in favor of Illinois
Farmers.
The appellate court reversed. No. 1--95--1870 (unpublished order under
Supreme Court Rule 23). The appellate court held that the exclusionary
language found in Illinois Farmers' policy violated section 143a--2(1). The
appellate court relied on Illinois Farmers Insurance Co. v. Cisco, 278 Ill.
App. 3d 1022 (1996), to support its conclusion. The appellate court remanded
to the trial court with directions to enter an order: (1) finding that
Illinois Farmers' policy provides uninsured-motorist coverage to Shane
secondary to the Casualty Insurance policy; and (2) submitting Shane's claim
against Illinois Farmers to arbitration.
Illinois Farmers filed a petition for leave to appeal. 155 Ill. 2d R.
315(a). We allowed Illinois Farmers' petition and consolidated it with cause
No. 80980.

DISCUSSION
The terms of an insurance policy are to be applied as written unless
those terms contravene public policy. Menke v. Country Mutual Insurance Co.,
78 Ill. 2d 420, 423 (1980). Insurance policy provisions that conflict with a
statute are void. American Family Mutual Insurance Co. v. Baaske, 213 Ill.
App. 3d 683, 688 (1991). Under the facts of these consolidated cases,
Illinois Farmers contends that the appellate court erred in finding that
paragraph 4 of its "Other Insurance" provision violates section 143a--2(1) of
the Insurance Code. We disagree.
The Insurance Code states that if an insurance company provides a motor
vehicle liability policy to an insured, the insurance company must provide a
statutory minimum of uninsured-motorist coverage (section 143a) and offer
additional coverage in an amount up to the insured's bodily injury liability
limits (section 143a--2(1)). Uninsured-motorist coverage is provided for the
protection of insureds who are legally entitled to recover damages from
owners or operators of uninsured motor vehicles. See Ill. Rev. Stat. 1989,
ch. 73, pars. 755a, 755a--2(1).
Paragraph 4 of Illinois Farmers' "Other Insurance" provision states that
uninsured-motorist coverage will not apply "for a vehicle other than your
insured car, unless the owner of that vehicle has no other insurance
applicable to this part." By the "Other Insurance" provision of its policy,
Illinois Farmers attempts to condition the uninsured-motorist coverage of its
policy on the availability of similar coverage on a nonowned vehicle rather
than on the uninsured status of the person causing the insured's injury.
Because the focus of the statute requiring coverage is on the uninsured
status of the person causing the insured's injury, we believe that a
provision conditioning uninsured-motorist coverage on the availability of
another party's uninsured-motorist coverage is contrary to the statute and is
therefore void. The Insurance Code specifically outlines the scope of
coverage under an uninsured-motorist provision. Automobile policies must
provide coverage "for the protection of persons insured thereunder who are
legally entitled to recover damages from owners or operators of uninsured
motor vehicles." Ill. Rev. Stat. 1989, ch. 73, par. 755a. Insured claimants
who fit these criteria are statutorily entitled to coverage, and policy
language which attempts to further restrict the right to coverage violates
the language and intent of the statute.
Illinois Farmers argues that this result conflicts with Luechtefeld, 167 Ill. 2d 148, Vanek, 268 Ill. App. 3d 731, Shefner, 243 Ill. App. 3d 683, and
Hecker, 183 Ill. App. 3d 13. We disagree. In Luechtefeld, Vanek, Shefner, and
Hecker, the insured in question selected the policy and the uninsured-
motorist limits that applied to the owned vehicle in which the injury
occurred. The insured was therefore bound by his or her choice of lower
uninsured-motorist coverage for that owned vehicle.
In these consolidated cases, the Ciscos and Shane made a choice
regarding their own policies and opted for a higher level of uninsured-
motorist coverage. Pursuant to section 143a--2(1), the insureds accepted
Illinois Farmers' offer of additional insurance and purchased uninsured-
motorist coverage equal to their bodily injury liability limits. The Ciscos
and Shane did not select the uninsured-motorist coverages on the nonowned
vehicles they were driving at the time of the accidents which provided a
lower level of uninsured-motorist benefits. Luechtefeld, Vanek, Shefner, and
Hecker are not controlling here.
Next, Illinois Farmers argues that if Richard Cisco and Charles Shane
desired uninsured-motorist coverage in excess of the statutory minimums
provided by their employers, Cisco and Shane should have purchased additional
insurance on their employers' vehicles. Illinois Farmers premises this
argument on the idea that Cisco and Shane had an insurable interest in their
employers' vehicles because the vehicles were furnished or available for
their regular use. Because Cisco and Shane did not obtain uninsured-motorist
coverage in excess of the minimum limits to cover themselves while operating
an employer's vehicle, Illinois Farmers argues they should not be allowed to
collect benefits in excess of the statutory minimums.
This argument is waived. There was no determination made in the trial
court regarding whether the vehicles owned by Cisco's and Shane's employers
were furnished or available for the insureds' regular use. Nor was this issue
addressed in the appellate court. Furthermore, paragraph 4 of Illinois
Farmers' "Other Insurance" provision is not limited to situations in which an
insured is injured by an uninsured motorist while occupying a vehicle
furnished or available for an insured's regular use.
Finally, Illinois Farmers argues that an exclusion found in the
"LIABILITY" portion of its policy serves to exclude uninsured-motorist
coverage provided in the "UNINSURED MOTORIST" portion of its policy. Illinois
Farmers claims that because liability coverage for Cisco and Shane is
excluded when they operate a vehicle furnished by an employer for their
regular use, uninsured-motorist coverage is also excluded under the same set
of circumstances. This argument was never addressed or ruled upon by the
trial or appellate courts. Also, Illinois Farmers raises this argument for
the first time in its reply brief. Under Supreme Court Rule 341(e)(7), points
not argued in an appellant's brief are waived and shall not be raised in the
reply brief. 155 Ill. 2d R. 341(e)(7). Therefore, this argument is waived.

CONCLUSION
For the foregoing reasons, we find that under the facts of these
consolidated cases, paragraph 4 of Illinois Farmers' "Other Insurance"
provision violates section 143a--2(1) of the Insurance Code (Ill. Rev. Stat.
1989, ch. 73, par. 755a--2(1)). Accordingly, the judgments of the appellate
court are affirmed.

No. 80980--Affirmed.
No. 81048--Affirmed.

JUSTICE HEIPLE, dissenting:
Illinois, like virtually every other state, has enacted a redistributive
scheme commonly known as the uninsured-motorist statute. Ill. Rev. Stat.
1989, ch. 73, par. 755a. Section 143a of the Insurance Code requires that
every liability insurance policy issued for any motor vehicle registered in
Illinois provide coverage for bodily injury or death caused by an uninsured
or hit-and-run motorist. Ill. Rev. Stat. 1989, ch. 73, par. 755a. The statute
is specifically designed to shift the risk of loss associated with uninsured
motorists from the injured victim of a motor vehicle accident to the
insurance industry, which in turn spreads the risk across the insurance
buying public by adjusting premiums.
The statute, however, does not provide the uninsured-motorist's victim
with a full recovery or even a fair recovery. Rather, recognizing the
enormous costs inherent in mandating uninsured-motorist coverage, the
legislature expressly limited the minimum amount of coverage in section 7--
203 of the Illinois Vehicle Code to what has become known as the "statutory
minimum." Ill. Rev. Stat. 1989, ch. 95«, par. 7--203. Thus, as this court has
consistently recognized, "the purpose of the uninsured-motorist statute is to
place the insured policyholder in substantially the same position he would
occupy if the uninsured driver had been minimally insured." Luechtefeld v.
Allstate Insurance Co., 167 Ill. 2d 148, 152 (1995), citing Hoglund v. State
Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272, 277 (1992); Menke v.
Country Mutual Insurance Co., 78 Ill. 2d 420 (1980); Putnam v. New Amsterdam
Casualty Co., 48 Ill. 2d 71, 89 (1970).
The insurance policies at issue provided the policyholders with
uninsured-motorist coverage in the amounts of $100,000 per person and
$300,000 per occurrence--that is, coverage in excess of the statutory
minimum. But under the plain language of the policies, the insureds were not
entitled to such coverage if they were injured in a car other than their own
for which other insurance was in effect. The policies expressly state:
"We will not provide insurance for a vehicle other than your
insured car, unless the owner of that vehicle has no other
insurance applicable to this part."
Here the insureds bargained for uninsured-motorist coverage in excess of the
statutory minimum but clearly subject to the above exclusion. Because each of
the insureds in this consolidated case was driving an employer's vehicle
(i.e., a vehicle other than his or her own) and the employer's vehicle was
covered by an insurance policy, the insureds were not entitled to recover
under their own policies. Each insured did, however, recover under his
employer's insurance policy, which provided uninsured-motorist benefits of
$20,000 per person and $40,000 per occurrence--the minimum amount of coverage
mandated by statute.
As this court has repeatedly stated, the purpose behind the uninsured-
motorist statute is " `to place the policyholder in substantially the same
position he would occupy, so far as his being injured or killed is concerned,
if the wrongful driver had had the minimum liability insurance required by
the [Illinois Vehicle Code].' " Squire v. Economy Fire & Casualty Co., 69 Ill. 2d 167, 176 (1977), quoting Ullman v. Wolverine Insurance Co., 48 Ill. 2d 1, 4 (1970). This purpose is not frustrated so long as the policyholder
receives the statutory minimum. Luechtefeld, 167 Ill. 2d at 153-54. In
Luechtefeld, this court interpreted a similar exclusionary clause and voted
unanimously to enforce the clause which excluded uninsured-motorist coverage
when the policyholder was in a vehicle which he owned but which was covered
by another policy: "As long as the coverage under the other policy equals or
exceeds the minimum sums set forth in the Illinois Vehicle Code [citation],
there is no conflict between the exclusionary clause in [the] policy and
section 143a." Luechtefeld, 167 Ill. 2d at 153.
The exclusionary clause at issue here only applies if the insured is
injured in a vehicle covered under another policy. Enforcement of this
exclusion by its plain terms would never frustrate the purpose behind the
uninsured-motorist statute because the provision operates to exclude coverage
only when the insured can seek recovery under another policy. Thus,
enforcement of this exclusionary clause would never leave an insured without
coverage.
A majority of this court--discontented with the result which would
obtain in this case under the sound application of traditional contract
principles--has seen fit to rewrite the parties' insurance contract. The
majority declares the exclusionary clause to be "contrary" to the statute and
thus void.
Simply stated, the uninsured-motorist statute requires only that an
insured recover the statutory minimum. Ill. Rev. Stat. 1989, ch. 73, par.
755a; Luechtefeld, 167 Ill. 2d at 153, 159. An exclusion or limitation in an
insurance policy does not violate the statute unless it deprives the insured
of the statutory minimum. Luechtefeld, 167 Ill. 2d at 153. The insureds here
recovered the statutory minimum under their employers' insurance policies;
nothing in their own policies or the statute entitles them to more.
Accordingly, I respectfully dissent.