Cummins v. Country Mutual Insurance Co.
Annotate this Case
Cummins v. Country Mutual Insurance Co., No. 81455
(10/2/97)
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 No. 81455--Agenda 16--March 1997.
CRAIG CUMMINS, Appellee, v. COUNTRY MUTUAL INSURANCE
COMPANY, Appellant.
Opinion filed October 2, 1997.
JUSTICE HARRISON delivered the judgment of the
court:
Plaintiff, Craig Cummins, filed suit in the circuit
court of St. Clair County to recover underinsured-
motorist benefits from defendant, Country Mutual
Insurance Company (Country Mutual). Country Mutual filed
a motion to dismiss plaintiff's complaint contending that
the liable driver's vehicle was not underinsured, as
defined in the Illinois Insurance Code, because the
driver carried liability limits which were equal to the
limits of plaintiff's underinsured-motorist coverage. The
trial court granted defendant's motion to dismiss, and
plaintiff appealed. The appellate court reversed and
remanded the cause for further proceedings, with one
justice specially concurring. 281 Ill. App. 3d 5. The
appellate court held that plaintiff could state a claim
for the underinsured-motorist coverage provided by
Country Mutual. We granted defendant's petition for leave
to appeal. 155 Ill. 2d R. 315.
The sole issue before this court is whether
plaintiff could state a claim to recover the shortfall
between his underinsured-motorist policy limits and the
amount he actually recovered from the liable driver's
insurance, when the liable driver's policy has limits
identical to plaintiff's underinsured-motorist coverage,
but the coverage was exhausted by payments to other
injured claimants. For the reasons which follow, we
affirm the judgment of the appellate court.
On February 20, 1992, Cummins suffered injuries in
a two-car accident and sustained over $50,000 in damages.
Cummins was the passenger in a car insured by Country
Mutual. At the time of the accident, Cummins was covered
by the Country Mutual insurance policy, which provided
both uninsured- and underinsured-motorist benefits in the
amount of $50,000 per person and $100,000 per accident.
The other motorist, who collided with the Country Mutual
vehicle, was determined to be at-fault and had insurance
with identical liability limits of $50,000 per person and
$100,000 per accident. Cummins received a court-approved,
good-faith settlement of $35,000 from the at-fault
driver, with the balance of the liability proceeds going
to injured passengers in the at-fault driver's vehicle.
Cummins filed suit against Country Mutual seeking
the $15,000 difference between the $35,000 which he
received as a settlement from the at-fault driver's
liability insurance and the $50,000 limit of Country
Mutual's underinsured-motorist coverage. Cummins is the
sole claimant to Country Mutual's underinsured-motorist
coverage. Country Mutual filed a motion to dismiss
plaintiff's complaint for failure to state a cause of
action (735 ILCS 5/2--615 (West 1992)), claiming that the
at-fault driver's vehicle was not "underinsured" as
defined in the policy and section 143a--2(4) of the
Illinois Insurance Code (215 ILCS 5/143a--2(4) (West
1992)). Defendant argued that even though plaintiff was
not indemnified up to the $50,000 amount guaranteed by
defendant's underinsured-motorist coverage, the at-fault
driver's vehicle did not meet the definition of
underinsured because the limits of liability coverage
were identical to the limits of plaintiff's underinsured-
motorist coverage. According to defendant, Cummins could
not recover any underinsured-motorist benefits.
Initially, the trial court denied defendant's
motion to dismiss. However, the trial court reconsidered
its original ruling in light of Purlee v. Liberty Mutual
Fire Insurance Co., 260 Ill. App. 3d 11 (1994). The trial
court felt compelled to follow the decision in Purlee,
which held that where the at-fault driver's liability
insurance limits "equal or exceed the underinsured
motorist coverage limits, underinsured motorist coverage
is not applicable." See Purlee, 260 Ill. App. 3d at 27.
Here, the at-fault motorist's insurance policy limits
equalled plaintiff's underinsured-motorist policy limits.
Based on the reasoning in Purlee, the trial court found
that the at-fault motorist was not underinsured, and
granted defendant's motion to dismiss.
The appellate court reversed and remanded with one
justice specially concurring. 281 Ill. App. 3d 5. The
court found that the Country Mutual's insurance policy
was ambiguous and subject to a reasonable interpretation
other than the one urged by defendant. 281 Ill. App. 3d
at 13. The court looked to the language of section 143a--
2(4) and the intent of the statute to determine whether
the availability of underinsured-motorist coverage should
be measured by comparing the limit of the plaintiff's
underinsured-motorist coverage to the stated limits of
the at-fault motorist's liability coverage or to the
amount the plaintiff actually recovers from the at-fault
motorist.
The court held that the relevant factor to be
considered is the amount actually recovered from the at-
fault driver, not the limits of liability coverage. 281
Ill. App. 3d at 13. In the present case, there was a gap
between the $35,000 actually recovered from the at-fault
motorist's insurance and plaintiff's $50,000
underinsured-motorist limits. The appellate court
concluded that the at-fault motorist was underinsured
and, therefore, plaintiff could state a claim for $15,000
in underinsured-motorist benefits. 281 Ill. App. 3d at
14.
As stated, at issue is whether Cummins can state a
claim to recover the difference between his underinsured-
motorist coverage limits and the amount he actually
received from the at-fault motorist's liability policy.
We must determine whether the at-fault vehicle in this
case was considered an "underinsured motor vehicle,"
enabling plaintiff to state a claim against Country
Mutual for underinsured-motorist benefits. Section 143a--
2(4), the underinsured-motorist provision of the Illinois
Insurance Code, provides:
"For the purpose of this Code the term
`underinsured motor vehicle' means a motor
vehicle whose ownership, maintenance or use
has resulted in bodily injury or death of the
insured, as defined in the policy, and for
which the sum of the limits of liability under
all bodily injury liability insurance policies
or under bonds or other security required to
be maintained under Illinois law applicable to
the driver or to the person or organization
legally responsible for such vehicle and
applicable to the vehicle, is less than the
limits for underinsured coverage provided the
insured as defined in the policy at the time
of the accident. The limits of liability for
an insurer providing underinsured motorist
coverage shall be the limits of such coverage,
less those amounts actually recovered under
the applicable bodily injury insurance
policies, bonds or other security maintained
on the underinsured motor vehicle." 215 ILCS
5/143a--2(4) (West 1992).
Country Mutual's insurance policy defined an
underinsured motor vehicle as follows:
"2. Underinsured motor vehicle means any
type of motor vehicle or trailer for which the
sum of all liability bonds or policies at the
time of an accident are less than the limit of
this insurance." (Emphasis in original.)
The issue before us is one of statutory
construction, requiring the court to first look at the
language of the underinsured-motorist statute to
ascertain and give effect to the legislature's intent.
State Farm Fire & Casualty Co. v. Yapejian, 152 Ill. 2d 533, 540-41 (1992). In determining legislative intent, a
court may also consider the reason and necessity for the
law, the evils to be remedied, and the objectives to be
attained. Yapejian, 152 Ill. 2d at 541. In construing
statutory language, a court will assume that the
legislature did not intend to produce an absurd or unjust
result. Yapejian, 152 Ill. 2d at 541.
Country Mutual contends that under the clear
language of section 143a--2(4) and the policy provision,
underinsured-motorist coverage is triggered only when the
claimant carries a higher amount of underinsured-motorist
coverage than the amount of liability coverage maintained
by the at-fault driver. See Purlee, 260 Ill. App. 3d at
26. Defendant notes that the first sentence of section
143a--2(4) expressly defines an "underinsured motor
vehicle" by reference to the limits of liability coverage
compared to the limits of underinsured-motorist coverage.
Therefore, according to Country Mutual, the amount of
insurance proceeds actually recovered from the at-fault
driver is irrelevant when determining whether a motorist
is underinsured. Since there were identical limits of
coverage in this case, Country Mutual claims that the
unambiguous language contained in both section 143a--2(4)
and the policy provision compels a finding that the at-
fault motorist was not underinsured.
Plaintiff disagrees with this interpretation of
section 143a--2(4) and the policy at issue and argues
that the language defining an underinsured motorist is
ambiguous. Specifically, plaintiff claims that the
statute simply does not say whether the definition of
underinsured motorist is meant to refer to the
recoverable limits of an at-fault motorist's liability
coverage or to the stated limits of that coverage,
regardless of the amount actually available. Similarly,
plaintiff contends that the definition contained in
Country Mutual's policy does not specifically refer to
the stated limits of the at-fault driver's liability
insurance as opposed to the recoverable limits.
The underinsured-motorist statute defines an
"underinsured motor vehicle" as one "for which the sum of
the limits of liability under all bodily injury liability
insurance policies *** is less than the limits for
underinsured coverage." 215 ILCS 5/143a--2(4) (West
1992). We agree with plaintiff that it is unclear from
the definition whether underinsured-motorist status
should be determined by comparing the limits of
plaintiff's underinsured-motorist coverage to the stated
limits of liability coverage or to the recoverable
limits. The definition, contained in both the statute and
Country Mutual's policy, does not expressly refer to the
stated policy limits as opposed to the amount of
liability insurance actually recovered. However, the
second sentence of section 143a--2(4) does specifically
refer to the amount of insurance proceeds actually
recovered and provides that "[t]he limits of liability
for an insurer providing underinsured motorist coverage
shall be the limits of such coverage, less those amounts
actually recovered under the applicable bodily injury
insurance policies *** maintained on the underinsured
motor vehicle." 215 ILCS 5/143a--2(4) (West 1992).
Under this second sentence, the limits of an
insurer's liability are calculated by taking the limits
of underinsured-motorist coverage, less the amount
actually recovered from the at-fault driver's liability
insurance. The statute recognizes that the recoverability
of proceeds must be considered when calculating the
liability of an insurer who provides underinsured-
motorist coverage. Therefore, the amount actually
recovered may be the appropriate figure to be used in
determining whether a vehicle is underinsured.
Country Mutual disputes this interpretation and
urges us to follow the appellate court cases which hold
that the second clause of the statute only needs to be
examined after there has been an initial determination
that the at-fault driver's vehicle is underinsured. See
Purlee, 260 Ill. App. 3d at 26-27; Moriconi v. Sentry
Insurance of Illinois, Inc., 193 Ill. App. 3d 904, 908
(1990). Country Mutual contends that under Purlee and
Moriconi, for a liable vehicle to be considered
underinsured, an injured party must carry higher amounts
of underinsured-motorist coverage than the at-fault
driver's liability coverage. Purlee, 260 Ill. App. 3d at
26; Moriconi, 193 Ill. App. 3d at 908. Country Mutual
argues that first this determination of whether an at-
fault vehicle is underinsured must be made, and then, if
the vehicle meets the definition of "underinsured," this
second clause only comes into play to calculate the
amount of liability.
We disagree. In ascertaining the meaning of a
statute, the statute should be read as a whole and all of
the relevant parts must be considered. Kraft, Inc. v.
Edgar, 138 Ill. 2d 178, 189 (1990). Therefore, the second
sentence of section 143a--2(4) must be read in
conjunction with the definition provided in the first
sentence. The definition does not specifically refer to
an "underinsured motor vehicle" in terms of comparing the
limits of underinsured-motorist coverage to the amount of
liability insurance actually recovered. However, the
second sentence recognizes that injured parties may
recover the difference between their underinsured-
motorist policy limits and the amount they actually
recover from the at-fault driver's liability insurance.
We will not read the definition portion of the statute to
prevent a recovery of insurance proceeds when the very
next sentence authorizes the recovery of the same
proceeds.
Defendant also interprets the language of the
insurance policy itself to deny underinsured-motorist
benefits when the limits of coverage are identical. As
with the definition portion of the statute, we will not
read Country Mutual's policy to deny coverage when such
coverage is permitted in the second sentence of the
underinsured-motorist statute. Although parties are
generally free to enter into their own contracts,
statutes in force at the time an insurance policy was
issued are controlling. See Bertini v. State Farm Mutual
Automobile Insurance Co., 48 Ill. App. 3d 851, 854
(1977). The purpose underlying a statute cannot be
circumvented by inserting a contrary or restricting
provision in an insurance policy. Severs v. Country
Mutual Insurance Co., 89 Ill. 2d 515, 520 (1982). Any
conflict between statutory and insurance policy
provisions will be resolved in favor of the statutory
provisions. DC Electronics, Inc. v. Employers Modern Life
Co., 90 Ill. App. 3d 342, 348 (1980). Therefore, we
resolve any conflict between the underinsured-motorist
statute and Country Mutual's policy in favor of the
statute. As stated, the statutory language permits
plaintiff to recover underinsured-motorist benefits up to
the policy limits.
Furthermore, providing coverage that fills the gap
between the amount actually recovered from the liability
insurance and the underinsured-motorist policy limits is
consistent with the intent of the underinsured-motorist
statute. The cardinal rule of statutory construction "is
to ascertain and give effect to the true intent and
meaning of the legislature." Solich v. George & Anna
Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 81 (1994). When intent is unclear form the
statutory language itself, courts may consider the
purpose behind the law and the evils the law was designed
to remedy. Solich, 158 Ill. 2d at 81. When construing
section 143a--2(4), this court has stated that the
purpose of underinsured-motorist coverage is the same as
the underlying purpose of uninsured-motorist coverage,
which is "to place the insured in the same position he
would have occupied if the tortfeasor had carried
adequate insurance." Sulser v. Country Mutual Insurance
Co., 147 Ill. 2d 548, 555 (1992).
In Sulser, this court addressed the issue of whether
Country Mutual could reduce payments due to an insured
under underinsured-motorist coverage by the amount of
workers' compensation benefits received by the insured.
Sulser, 147 Ill. 2d at 551. To resolve this issue, the
court examined the House debates on section 143a--2(3),
which is now section 143a--2(4). The court concluded that
the drafters' intent in providing underinsured-motorist
coverage was to "fill the gap between the claim and the
tortfeasor's insurance" and to prevent the insured from
recovering amounts from the insurer over and above the
coverage provided by the underinsured-motorist policy.
Sulser, 147 Ill. 2d at 556. The court provided an example
of how underinsured-motorist coverage was to work,
stating that if the insured recovered $50,000 through the
tortfeasor's insurance policy, he or she would be
entitled to a payment of $50,000 under a $100,000
underinsured-motorist policy. Sulser, 147 Ill. 2d at 557.
The court concluded that in enacting the underinsured-
motorist statute, "the legislature avoided the absurdity
of a situation where a policyholder would receive fewer
benefits in the fortuitous event of being injured by an
underinsured rather than by an uninsured motorist."
Sulser, 147 Ill. 2d at 557.
If the position of Country Mutual were to be
adopted, this purpose would be frustrated. Under Country
Mutual's analysis, plaintiff could only receive $35,000
from the at-fault motorist who injured him. Cummins would
be prevented from receiving payment of the $15,000 gap
between his underinsured-motorist coverage and the
tortfeasor's liability coverage. However, if the liable
driver who caused Cummins' injuries had been completely
uninsured, Cummins would be entitled to the full $50,000
individual limit of his uninsured-motorist policy. The
very situation the legislature is trying to avoid would
be realized under Country Mutual's construction of
section 143a--2(4).
We agree with Sulser and the appellate court that
it would be absurd to allow Cummins to receive fewer
benefits after being injured by an underinsured driver
rather than an uninsured driver. 281 Ill. App. 3d at 12.
Sulser recognizes that the very purpose of underinsured-
motorist coverage is to cover the shortfall between the
amount of insurance contracted for and the amount
received from the liable driver. To achieve this purpose,
motorists must be considered "underinsured" when the
amount of liability insurance they actually pay out is
less than the amount of underinsured-motorist coverage a
policyholder obtains.
Further, in determining when coverage is
appropriate, this court can also consider a
policyholder's reasonable expectations and the coverage
intended by the insurance policy. See Hoglund v. State
Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272,
279 (1992). In this case, premiums were paid for $50,000
of underinsured-motorist coverage and plaintiff
reasonably expected coverage for damages caused by an
underinsured motorist up to that amount. In addition,
Country Mutual's insurance policy was intended to provide
coverage for damages caused by an underinsured motorist
and to place plaintiff in the same position as if the at-
fault driver had adequate insurance. If Country Mutual's
interpretation of the underinsured-motorist policy were
adopted, the underinsured-motorist protection contracted
for would no longer be available. In effect, the
policyholder would be denied substantial economic value
in return for the premiums paid. See Hoglund, 148 Ill. 2d
at 278.
The language and intent of the underinsured-motorist
statute, as well as the policyholder's reasonable
expectations, indicate coverage when there is a gap
between the amount actually recovered from the liable
motorist and the underinsured-motorist policy limit. We
follow the statutory language and the legislative intent
recognized by this court in Sulser and find that
"underinsured" must be defined by comparing the amount of
underinsured-motorist coverage to the amount of liability
coverage actually recovered from the at-fault driver. To
the extent that the amount of liability insurance
actually recovered is less than the amount of
underinsured-motorist coverage, the liable driver is
considered underinsured.
Here, the limits of liability coverage were
identical to the limits of plaintiff's underinsured-
motorist coverage, but plaintiff recovered less than the
available limits. Plaintiff received $35,000 in a court-
approved, good-faith settlement from the at-fault
driver's liability insurance. Plaintiff had a higher
level of underinsured-motorist coverage in the amount of
$50,000 per person and his damages exceeded this amount.
Therefore, we hold that the at-fault driver was
underinsured, and plaintiff is entitled to underinsured-
motorist coverage. Under Sulser, plaintiff needs $15,000
to "fill the gap" between his underinsured coverage
limits and the amount of liability insurance actually
recovered. We conclude that plaintiff is entitled to
state a claim for $15,000 in underinsured-motorist
benefits.
For the foregoing reasons, the judgment of the
appellate court is affirmed.
Affirmed.
CHIEF JUSTICE FREEMAN, specially concurring:
Like my colleagues in the plurality, I believe that
Country Mutual Insurance Company is obligated to pay its
insured's claim for underinsured-motorist coverage. I
cannot, however, ascribe to the rationale employed by the
plurality in reaching that conclusion. Rather, I would
take a different approach to resolving this case, one
which more fully comports with the intent of the General
Assembly when it drafted section 143a--2(4) of the
Illinois Insurance Code.
I
The dispositive issue in this case is whether
Cummins is entitled to underinsured-motorist coverage
under Illinois law. The resolution of this issue turns
upon the definition of the term "underinsured motor
vehicle" found in section 143a--2(4). That provision
provides in pertinent part:
"[T]he term `underinsured motor vehicle'
means a motor vehicle whose ownership,
maintenance or use has resulted in bodily
injury or death of the insured, as defined in
the policy, and for which the sum of the
limits of liability under all bodily injury
liability insurance policies or under bonds or
other security required to be maintained under
Illinois law applicable to the driver or to
the person or organization legally responsible
for such vehicle and applicable to the
vehicle, is less than the limits for
underinsured coverage provided the insured as
defined in the policy at the time of the
accident. The limits of liability for an
insurer providing underinsured motorist
coverage shall be the limits of such coverage,
less those amounts actually recovered under
the applicable bodily injury insurance
policies, bonds or other security maintained
on the underinsured motor vehicle." 215 ILCS
5/143a--2(4) (West 1992).
A careful review of the foregoing language reveals that
section 143a--2(4) establishes a two-part inquiry which
must be utilized in determining whether an insured is
entitled to underinsured-motorist coverage in any given
case. The first step of the inquiry requires us to
determine whether the "motor vehicle whose ownership,
maintenance or use has resulted in bodily injury or death
of the insured" is, in fact, an "underinsured motor
vehicle." 215 ILCS 5/143a--2(4) (West 1992). To that end,
the first sentence of section 143a--2(4) tells us that
such a vehicle is so defined when its limits of liability
are "less than the limits for underinsured coverage
provided the insured" in his or her underinsurance policy
at the time of the accident. (Emphasis added.) 215 ILCS
5/143a--2(4) (West 1992). Once the vehicle qualifies as
an underinsured motor vehicle under the first sentence of
the statute, the second step of the inquiry requires us
to next determine how much recovery, if any, is to be
permitted to the insured from his or her underinsurance
carrier. The second sentence of the statute provides the
answer--recovery is limited to "the limits of [the
underinsured policy] less those amounts actually
recovered under the applicable bodily injury insurance
policies, bonds or other security maintained on the
underinsured motor vehicle." 215 ILCS 5/143a--2(4) (West
1992). Put another way, the second sentence of the
underinsured-motorist statute limits the underinsured-
motorist payment to the limit of the underinsured
coverage, less any proceeds received from the at-fault
driver's policy.
Applying this two-step inquiry to the facts in this
case, it becomes readily apparent that the vehicle which
injured Cummins is not, in fact, an underinsured vehicle,
at least according to a strict or literal reading of the
definition of such a vehicle as set forth in the first
sentence of section 143a--2(4). This result obtains
because Cummins' underinsured policy limits, i.e.,
$50,000 per person/$100,000 per accident, are equal to
the liability limits carried by the at-fault driver,
i.e., $50,000 per person/$100,000 per accident. Thus,
because the at-fault driver's vehicle does not qualify as
an underinsured motor vehicle under the first sentence of
section 143a--2(4), there is no need to look to the
second sentence which pertains to the amount Cummins is
entitled to recover.
The plurality, however, ignores the plain language
of the first sentence of section 143a--2(4) and, looking
to the second sentence, declares that the statute
"recognizes that injured parties may recover the
difference between their underinsured-motorist policy
limits and the amount they actually recover from the at-
fault driver's liability insurance." Slip op. at 6.
Having conflated the two sentences, and thereby
obliterating the two-step inquiry established in the
statute, my colleagues insist that the first sentence
cannot prevent a recovery of insurance proceeds "when the
very next sentence authorizes the recovery." Slip op. at
6. I, however, cannot concur in the plurality's assertion
that the second sentence "authorizes the recovery." As I
pointed out above, it is the first sentence of section
143a--2(4), and the first sentence alone, which controls
the inquiry into whether the at-fault vehicle can be
deemed an "underinsured motor vehicle." Because there is
no underinsured vehicle involved in this case by
operation of that first sentence, the second sentence of
section 143a--2(4) is wholly irrelevant. For this reason,
I do not believe the plurality's analysis can withstand
scrutiny.
II
Having set forth the reasons why I consider the
plurality's interpretation of section 143a--2(4) to be
flawed, I will now explain why I believe that
underinsurance coverage is nevertheless mandated in this
case. This court has long recognized that the proper
interpretation of any statutory enactment cannot be based
solely upon the bare language of the statute in question,
but "must be grounded on the `nature, objects and the
consequences that would result from construing it one way
or the other.' " Mulligan v. Joliet Regional Port
District, 123 Ill. 2d 303, 313 (1988), quoting Carrigan
v. Illinois Liquor Control Comm'n, 19 Ill. 2d 230, 233
(1960). To that end, this court has cautioned that
" `[w]hen the literal enforcement of a statute would
result in great injustice and lead to consequences which
the legislature could not have contemplated, the courts
are bound to presume that such consequences were not
intended and will adopt a construction which it may be
reasonable to presume was contemplated by the
Legislature.' " People ex rel. Cason v. Ring, 41 Ill. 2d 305, 312-13 (1968), quoting Village of Glencoe v.
Hurford, 317 Ill. 203, 220 (1925). Accordingly, courts
will not construe a statute in such a way as to produce
an absurd result. Croissant v. Joliet Park District, 141 Ill. 2d 449 (1990).
The record in this case reveals that Cummins was not
the only claimant to the proceeds available under the at-
fault driver's liability policy. In fact, the other
claimants had already exhausted those proceeds by the
time Cummins received his court-approved, good-faith
settlement from the at-fault driver. Therefore, although
a face-value comparison may well reveal that Cummins'
underinsured-motorist limits and the at-fault driver's
liability limits are equal on paper, those amounts, in
reality, are unequal due to the fact that the at-fault
driver's resources have been depleted by the previous
payouts to the other claimants to the policy. Under these
circumstances, an absurd and unfair result obtains when
the precise language in the first sentence of section
143a--2(4) is applied to Cummins. This is best reflected
in a example given by Justice Maag in his special
concurrence to the appellate court's opinion in this
case:
"Assume that an automobile accident
occurs. Assume further that the driver of
vehicle `A' is negligent and is the cause of
the accident. The driver of vehicle `A'
carries $25,000 in liability coverage. The
driver of vehicle `B' carries $25,000 in
underinsured motorist coverage. Finally,
assume that in vehicle `B' there is one
passenger along with the driver of vehicle
`B.' If the passenger in vehicle `B'
immediately files suit and is awarded $25,000,
and if the judgment is paid in full by driver
`A' 's liability policy, then there would be
no coverage left under driver `A' 's policy to
pay a judgment later rendered in favor of the
driver of vehicle `B.' The driver of vehicle
`B,' despite having paid his insurance premium
dutifully, would not be entitled to recover
anything under his own underinsured motorist
coverage if the position of Country Mutual in
the instant case was adopted." (Emphasis
omitted.) 281 Ill. App. 3d 5, 15 (Maag, J.,
specially concurring).
I simply cannot believe that the legislature intended
underinsured-motorist coverage in this state to be
dependent upon the fortuity of being involved in an
accident in which only a single person is injured and
hence only a single claim is made against the at-fault
driver's liability policy. I should also point out that,
under the above hypothetical, the driver of vehicle "B"
would have been in a better position had the driver of
vehicle "A" been uninsured. At least then driver "B"
could have recovered benefits pursuant to his or her
uninsured-motorist coverage. Such results, of course, are
absurd. They also contravene, rather than further, the
General Assembly's stated purpose in drafting section
143a--2(4).
My research into the legislative history of section
143a--2(4) reveals that the statutory requirement that
insurance companies offer underinsured-motorist coverage
grew out of legislators' desire to provide compensation
for victims of inadequately insured motorists. The
General Assembly designed underinsured-motorist coverage
so that consumers could have the "opportunity to protect
[themselves]" from at-fault drivers who carry only
minimal amounts of liability insurance. 81st Ill. Gen.
Assem., House Proceedings, June 20, 1980, at 48
(statements of Representative Epton). For this reason,
the legislation was regarded as one which acted on
"behalf of the consumer." 81st Ill. Gen. Assem., House
Proceedings, June 20, 1980, at 48 (statements of
Representative Epton). Specifically, the legislature
intended to put the injured insured in the same position
he or she would have occupied had the at-fault driver
carried liability coverage equal to the insured's
underinsured-motorist coverage. 81st Ill. Gen. Assem.,
House Proceedings, June 20, 1980, at 44-45 (statement of
Representative Telcser). This was done in order to "fill
the gap between the claim [of the injured insured] and
the amount available from the underinsured." 81st Ill.
Gen. Assem., House Proceedings, June 20, 1980, at 44-45
(statement of Representative Telcser). Each of these
objectives is thwarted, however, if the definition of an
"underinsured motor vehicle" is given its literal meaning
in a situation where, as in this case, multiple claimants
are involved. Significantly, the legislative debates are
devoid of any indicia that the members of the General
Assembly ever addressed or considered the somewhat
infrequent multiple-claimant situation with which we are
confronted today.
In view of the foregoing, I believe that in
situations involving multiple claimants, a literal
interpretation of section 143a--2(4) "would result in
great injustice and lead to consequences which the
legislature could not have contemplated" or intended.
Ring, 41 Ill. 2d at 312. Accordingly, I believe that in
such cases, the judiciary is "bound to *** adopt a
construction which [may] be reasonable to presume was
contemplated by the legislature." Ring, 41 Ill. 2d at
313. In order to do so, we must construe the first
sentence of section 143a--2(4) so that the vehicle of the
at-fault driver will be deemed an "underinsured motor
vehicle" whenever the amount of that driver's liability
coverage becomes less than the amount of the insured's
underinsured-motorist coverage because of a payment of
proceeds to other claimants. Only in this way can we be
certain to effectuate the General Assembly's intent in
enacting underinsured-motorist legislation and, at the
same time, avoid the absurd results which occur whenever
multiple claimants are involved. Applying my analysis to
the facts of the present case, the vehicle of the at-
fault driver should be considered an "underinsured motor
vehicle" with respect to Cummins. In my opinion, it is
this interpretation of section 143a--2(4), and not the
interpretation proffered by the plurality, that obligates
Country Mutual Insurance Company to pay Cummins' claim
for underinsured-motorist coverage in this case.
JUSTICE McMORROW joins in this special concurrence.
JUSTICE HEIPLE, dissenting:
The Illinois General Assembly has explicitly
rejected the policy adopted today by this court. The
other opinions fail to discuss or even mention this fact.
Instead, the court engages in what can only be described
as an act of judicial legislation, defying the will of
the people as expressed through their elected
representatives. I therefore respectfully dissent.
The court today requires that an automobile insurer
pay up to the full amount of underinsured-motorist
coverage specified in its policy whenever an insured
sustains losses which are not fully covered by the
liability insurance of the driver at fault. This
requirement was once mandated by the General Assembly.
Section 148a--1 of the Illinois Insurance Code, effective
March 1, 1980, provided as follows:
"Under underinsured motorist coverage the
insurer agrees to pay damages the insured
would be legally entitled to recover, but
which are uncompensated because the total
damages exceed the liability coverage limits
of the owner of the at-fault vehicle." Pub.
Act 81--1202, eff. March 1, 1980.
This statute codified the policy adopted by the
plurality, basing underinsured-motorist liability on the
damages sustained by the insured.
This statute was subsequently repealed and replaced
with the current version:
"[T]he term `underinsured motor vehicle'
means a motor vehicle *** for which the sum of
the limits of liability under all bodily
injury liability insurance policies *** is
less than the limits for underinsured coverage
provided the insured *** at the time of the
accident." 215 ILCS 5/143a--2(4) (West 1994).
The new statute changed the basis of underinsured-
motorist liability from the insured's damages to the
relative limits of liability specified in the policies of
the parties involved in the accident. By continuing to
base underinsured liability on the insured's damages, the
plurality simply defies the legislature's repeal of the
earlier version of the statute.
Until the Fifth District's decision in this case,
every Illinois court which had considered the current
version of the statute, including a previous panel of the
Fifth District, agreed that the provision makes
underinsured coverage contingent on the limits of
liability specified in the policies of those involved in
the accident. See Golladay v. Allied American Insurance
Co., 271 Ill. App. 3d 465, 467-68 (1st Dist. 1995);
Illinois Farmers Insurance Co. v. Tabor, 267 Ill. App. 3d
245, 250 (2d Dist. 1994); Purlee v. Liberty Mutual Fire
Insurance Co., 260 Ill. App. 3d 11, 26 (5th Dist. 1994);
Moriconi v. Sentry Insurance of Illinois, Inc., 193 Ill.
App. 3d 904, 908 (4th Dist. 1990). For example, the court
in Golladay held:
"The determination of whether a tortfeasor's
vehicle is underinsured is made by comparing
the limits of liability insurance for bodily
injury applicable to that vehicle with the
limits of the injured person's UIM
[underinsured motorist] coverage. [Citation.]
It is only when the tortfeasor's coverage
limits are less than the injured party's UIM
coverage that the tortfeasor's vehicle meets
the statutory definition of an `underinsured
motor vehicle.' " Golladay, 271 Ill. App. 3d
at 467-68.
Each of the appellate opinions cited above specifically
rejected the construction of the statute advanced by the
plurality. Today this court overrules these decisions
solely by virtue of superior authority, not superior
analysis.
The plurality seeks support for its position in the
second sentence of section 143a--2(4) of the Insurance
Code:
"The limits of liability for an insurer
providing underinsured motorist coverage shall
be the limits of such coverage, less those
amounts actually recovered under the
applicable bodily injury insurance policies
*** maintained on the underinsured motor
vehicle." 215 ILCS 5/143a--2(4) (West 1994).
The plurality asserts that this sentence of the statute
"recognizes that the recoverability of proceeds must be
considered when calculating the liability of an insurer
who provides underinsured motorist coverage." The
plurality concludes that "[t]herefore, the amount
actually recovered may be the appropriate figure to be
used in determining whether a vehicle is underinsured."
Slip op. at 5.
Such a reading of the second sentence of section
143a--2(4) is wholly unwarranted and completely
insupportable. That provision merely grants an insurer
who is liable for underinsured-motorist coverage a set
off for the amount of proceeds the plaintiff actually
recovers from the at-fault driver's liability insurance.
Whether the insurer is liable for underinsured coverage
in the first place, however, is an entirely separate
question, which is answered by comparing the limits
specified in the insurance policies held by those
involved in the accident. As one court has explained:
"The application of section 143a--2(4) first
requires a determination of whether the tort-
feasor's vehicle is `underinsured' based on
the definition provided. The set-off clause
mandating the reduction of UIM payments by the
amounts received from the tort-feasor operates
only if the tort-feasor's vehicle is
classified as underinsured." Illinois Farmers
Insurance Co. v. Tabor, 267 Ill. App. 3d 245,
250 (1994).
As noted above, until the instant case, this
straightforward reading of the statute was the unanimous
conclusion of courts which had considered this issue.
Although the General Assembly has had ample opportunity
to disturb these decisions through recent amendments to
section 143a--2, it has declined to do so.
Both the plurality and the special concurrence offer
several potentially persuasive reasons for the State of
Illinois to require that an automobile insurer pay the
underinsured-motorist coverage specified in its policy
whenever the insured sustains losses which are not fully
covered by the liability insurance of the driver at
fault. The arguments contained in these opinions might
very well convince legislators that the state should once
again adopt such a requirement. Unfortunately, however,
rather than allow legislators to decide this question,
the court instead arrogates unto itself the legislative
function, imposing by judicial fiat a requirement the
General Assembly has specifically repealed. Because I
believe that the current Illinois Insurance Code cannot
possibly be read to contain such a requirement, I
respectfully dissent.
JUSTICE MILLER joins in this dissent.
(10/2/97)
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 No. 81455--Agenda 16--March 1997.
CRAIG CUMMINS, Appellee, v. COUNTRY MUTUAL INSURANCE
COMPANY, Appellant.
Opinion filed October 2, 1997.
JUSTICE HARRISON delivered the judgment of the
court:
Plaintiff, Craig Cummins, filed suit in the circuit
court of St. Clair County to recover underinsured-
motorist benefits from defendant, Country Mutual
Insurance Company (Country Mutual). Country Mutual filed
a motion to dismiss plaintiff's complaint contending that
the liable driver's vehicle was not underinsured, as
defined in the Illinois Insurance Code, because the
driver carried liability limits which were equal to the
limits of plaintiff's underinsured-motorist coverage. The
trial court granted defendant's motion to dismiss, and
plaintiff appealed. The appellate court reversed and
remanded the cause for further proceedings, with one
justice specially concurring. 281 Ill. App. 3d 5. The
appellate court held that plaintiff could state a claim
for the underinsured-motorist coverage provided by
Country Mutual. We granted defendant's petition for leave
to appeal. 155 Ill. 2d R. 315.
The sole issue before this court is whether
plaintiff could state a claim to recover the shortfall
between his underinsured-motorist policy limits and the
amount he actually recovered from the liable driver's
insurance, when the liable driver's policy has limits
identical to plaintiff's underinsured-motorist coverage,
but the coverage was exhausted by payments to other
injured claimants. For the reasons which follow, we
affirm the judgment of the appellate court.
On February 20, 1992, Cummins suffered injuries in
a two-car accident and sustained over $50,000 in damages.
Cummins was the passenger in a car insured by Country
Mutual. At the time of the accident, Cummins was covered
by the Country Mutual insurance policy, which provided
both uninsured- and underinsured-motorist benefits in the
amount of $50,000 per person and $100,000 per accident.
The other motorist, who collided with the Country Mutual
vehicle, was determined to be at-fault and had insurance
with identical liability limits of $50,000 per person and
$100,000 per accident. Cummins received a court-approved,
good-faith settlement of $35,000 from the at-fault
driver, with the balance of the liability proceeds going
to injured passengers in the at-fault driver's vehicle.
Cummins filed suit against Country Mutual seeking
the $15,000 difference between the $35,000 which he
received as a settlement from the at-fault driver's
liability insurance and the $50,000 limit of Country
Mutual's underinsured-motorist coverage. Cummins is the
sole claimant to Country Mutual's underinsured-motorist
coverage. Country Mutual filed a motion to dismiss
plaintiff's complaint for failure to state a cause of
action (735 ILCS 5/2--615 (West 1992)), claiming that the
at-fault driver's vehicle was not "underinsured" as
defined in the policy and section 143a--2(4) of the
Illinois Insurance Code (215 ILCS 5/143a--2(4) (West
1992)). Defendant argued that even though plaintiff was
not indemnified up to the $50,000 amount guaranteed by
defendant's underinsured-motorist coverage, the at-fault
driver's vehicle did not meet the definition of
underinsured because the limits of liability coverage
were identical to the limits of plaintiff's underinsured-
motorist coverage. According to defendant, Cummins could
not recover any underinsured-motorist benefits.
Initially, the trial court denied defendant's
motion to dismiss. However, the trial court reconsidered
its original ruling in light of Purlee v. Liberty Mutual
Fire Insurance Co., 260 Ill. App. 3d 11 (1994). The trial
court felt compelled to follow the decision in Purlee,
which held that where the at-fault driver's liability
insurance limits "equal or exceed the underinsured
motorist coverage limits, underinsured motorist coverage
is not applicable." See Purlee, 260 Ill. App. 3d at 27.
Here, the at-fault motorist's insurance policy limits
equalled plaintiff's underinsured-motorist policy limits.
Based on the reasoning in Purlee, the trial court found
that the at-fault motorist was not underinsured, and
granted defendant's motion to dismiss.
The appellate court reversed and remanded with one
justice specially concurring. 281 Ill. App. 3d 5. The
court found that the Country Mutual's insurance policy
was ambiguous and subject to a reasonable interpretation
other than the one urged by defendant. 281 Ill. App. 3d
at 13. The court looked to the language of section 143a--
2(4) and the intent of the statute to determine whether
the availability of underinsured-motorist coverage should
be measured by comparing the limit of the plaintiff's
underinsured-motorist coverage to the stated limits of
the at-fault motorist's liability coverage or to the
amount the plaintiff actually recovers from the at-fault
motorist.
The court held that the relevant factor to be
considered is the amount actually recovered from the at-
fault driver, not the limits of liability coverage. 281
Ill. App. 3d at 13. In the present case, there was a gap
between the $35,000 actually recovered from the at-fault
motorist's insurance and plaintiff's $50,000
underinsured-motorist limits. The appellate court
concluded that the at-fault motorist was underinsured
and, therefore, plaintiff could state a claim for $15,000
in underinsured-motorist benefits. 281 Ill. App. 3d at
14.
As stated, at issue is whether Cummins can state a
claim to recover the difference between his underinsured-
motorist coverage limits and the amount he actually
received from the at-fault motorist's liability policy.
We must determine whether the at-fault vehicle in this
case was considered an "underinsured motor vehicle,"
enabling plaintiff to state a claim against Country
Mutual for underinsured-motorist benefits. Section 143a--
2(4), the underinsured-motorist provision of the Illinois
Insurance Code, provides:
"For the purpose of this Code the term
`underinsured motor vehicle' means a motor
vehicle whose ownership, maintenance or use
has resulted in bodily injury or death of the
insured, as defined in the policy, and for
which the sum of the limits of liability under
all bodily injury liability insurance policies
or under bonds or other security required to
be maintained under Illinois law applicable to
the driver or to the person or organization
legally responsible for such vehicle and
applicable to the vehicle, is less than the
limits for underinsured coverage provided the
insured as defined in the policy at the time
of the accident. The limits of liability for
an insurer providing underinsured motorist
coverage shall be the limits of such coverage,
less those amounts actually recovered under
the applicable bodily injury insurance
policies, bonds or other security maintained
on the underinsured motor vehicle." 215 ILCS
5/143a--2(4) (West 1992).
Country Mutual's insurance policy defined an
underinsured motor vehicle as follows:
"2. Underinsured motor vehicle means any
type of motor vehicle or trailer for which the
sum of all liability bonds or policies at the
time of an accident are less than the limit of
this insurance." (Emphasis in original.)
The issue before us is one of statutory
construction, requiring the court to first look at the
language of the underinsured-motorist statute to
ascertain and give effect to the legislature's intent.
State Farm Fire & Casualty Co. v. Yapejian, 152 Ill. 2d 533, 540-41 (1992). In determining legislative intent, a
court may also consider the reason and necessity for the
law, the evils to be remedied, and the objectives to be
attained. Yapejian, 152 Ill. 2d at 541. In construing
statutory language, a court will assume that the
legislature did not intend to produce an absurd or unjust
result. Yapejian, 152 Ill. 2d at 541.
Country Mutual contends that under the clear
language of section 143a--2(4) and the policy provision,
underinsured-motorist coverage is triggered only when the
claimant carries a higher amount of underinsured-motorist
coverage than the amount of liability coverage maintained
by the at-fault driver. See Purlee, 260 Ill. App. 3d at
26. Defendant notes that the first sentence of section
143a--2(4) expressly defines an "underinsured motor
vehicle" by reference to the limits of liability coverage
compared to the limits of underinsured-motorist coverage.
Therefore, according to Country Mutual, the amount of
insurance proceeds actually recovered from the at-fault
driver is irrelevant when determining whether a motorist
is underinsured. Since there were identical limits of
coverage in this case, Country Mutual claims that the
unambiguous language contained in both section 143a--2(4)
and the policy provision compels a finding that the at-
fault motorist was not underinsured.
Plaintiff disagrees with this interpretation of
section 143a--2(4) and the policy at issue and argues
that the language defining an underinsured motorist is
ambiguous. Specifically, plaintiff claims that the
statute simply does not say whether the definition of
underinsured motorist is meant to refer to the
recoverable limits of an at-fault motorist's liability
coverage or to the stated limits of that coverage,
regardless of the amount actually available. Similarly,
plaintiff contends that the definition contained in
Country Mutual's policy does not specifically refer to
the stated limits of the at-fault driver's liability
insurance as opposed to the recoverable limits.
The underinsured-motorist statute defines an
"underinsured motor vehicle" as one "for which the sum of
the limits of liability under all bodily injury liability
insurance policies *** is less than the limits for
underinsured coverage." 215 ILCS 5/143a--2(4) (West
1992). We agree with plaintiff that it is unclear from
the definition whether underinsured-motorist status
should be determined by comparing the limits of
plaintiff's underinsured-motorist coverage to the stated
limits of liability coverage or to the recoverable
limits. The definition, contained in both the statute and
Country Mutual's policy, does not expressly refer to the
stated policy limits as opposed to the amount of
liability insurance actually recovered. However, the
second sentence of section 143a--2(4) does specifically
refer to the amount of insurance proceeds actually
recovered and provides that "[t]he limits of liability
for an insurer providing underinsured motorist coverage
shall be the limits of such coverage, less those amounts
actually recovered under the applicable bodily injury
insurance policies *** maintained on the underinsured
motor vehicle." 215 ILCS 5/143a--2(4) (West 1992).
Under this second sentence, the limits of an
insurer's liability are calculated by taking the limits
of underinsured-motorist coverage, less the amount
actually recovered from the at-fault driver's liability
insurance. The statute recognizes that the recoverability
of proceeds must be considered when calculating the
liability of an insurer who provides underinsured-
motorist coverage. Therefore, the amount actually
recovered may be the appropriate figure to be used in
determining whether a vehicle is underinsured.
Country Mutual disputes this interpretation and
urges us to follow the appellate court cases which hold
that the second clause of the statute only needs to be
examined after there has been an initial determination
that the at-fault driver's vehicle is underinsured. See
Purlee, 260 Ill. App. 3d at 26-27; Moriconi v. Sentry
Insurance of Illinois, Inc., 193 Ill. App. 3d 904, 908
(1990). Country Mutual contends that under Purlee and
Moriconi, for a liable vehicle to be considered
underinsured, an injured party must carry higher amounts
of underinsured-motorist coverage than the at-fault
driver's liability coverage. Purlee, 260 Ill. App. 3d at
26; Moriconi, 193 Ill. App. 3d at 908. Country Mutual
argues that first this determination of whether an at-
fault vehicle is underinsured must be made, and then, if
the vehicle meets the definition of "underinsured," this
second clause only comes into play to calculate the
amount of liability.
We disagree. In ascertaining the meaning of a
statute, the statute should be read as a whole and all of
the relevant parts must be considered. Kraft, Inc. v.
Edgar, 138 Ill. 2d 178, 189 (1990). Therefore, the second
sentence of section 143a--2(4) must be read in
conjunction with the definition provided in the first
sentence. The definition does not specifically refer to
an "underinsured motor vehicle" in terms of comparing the
limits of underinsured-motorist coverage to the amount of
liability insurance actually recovered. However, the
second sentence recognizes that injured parties may
recover the difference between their underinsured-
motorist policy limits and the amount they actually
recover from the at-fault driver's liability insurance.
We will not read the definition portion of the statute to
prevent a recovery of insurance proceeds when the very
next sentence authorizes the recovery of the same
proceeds.
Defendant also interprets the language of the
insurance policy itself to deny underinsured-motorist
benefits when the limits of coverage are identical. As
with the definition portion of the statute, we will not
read Country Mutual's policy to deny coverage when such
coverage is permitted in the second sentence of the
underinsured-motorist statute. Although parties are
generally free to enter into their own contracts,
statutes in force at the time an insurance policy was
issued are controlling. See Bertini v. State Farm Mutual
Automobile Insurance Co., 48 Ill. App. 3d 851, 854
(1977). The purpose underlying a statute cannot be
circumvented by inserting a contrary or restricting
provision in an insurance policy. Severs v. Country
Mutual Insurance Co., 89 Ill. 2d 515, 520 (1982). Any
conflict between statutory and insurance policy
provisions will be resolved in favor of the statutory
provisions. DC Electronics, Inc. v. Employers Modern Life
Co., 90 Ill. App. 3d 342, 348 (1980). Therefore, we
resolve any conflict between the underinsured-motorist
statute and Country Mutual's policy in favor of the
statute. As stated, the statutory language permits
plaintiff to recover underinsured-motorist benefits up to
the policy limits.
Furthermore, providing coverage that fills the gap
between the amount actually recovered from the liability
insurance and the underinsured-motorist policy limits is
consistent with the intent of the underinsured-motorist
statute. The cardinal rule of statutory construction "is
to ascertain and give effect to the true intent and
meaning of the legislature." Solich v. George & Anna
Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 81 (1994). When intent is unclear form the
statutory language itself, courts may consider the
purpose behind the law and the evils the law was designed
to remedy. Solich, 158 Ill. 2d at 81. When construing
section 143a--2(4), this court has stated that the
purpose of underinsured-motorist coverage is the same as
the underlying purpose of uninsured-motorist coverage,
which is "to place the insured in the same position he
would have occupied if the tortfeasor had carried
adequate insurance." Sulser v. Country Mutual Insurance
Co., 147 Ill. 2d 548, 555 (1992).
In Sulser, this court addressed the issue of whether
Country Mutual could reduce payments due to an insured
under underinsured-motorist coverage by the amount of
workers' compensation benefits received by the insured.
Sulser, 147 Ill. 2d at 551. To resolve this issue, the
court examined the House debates on section 143a--2(3),
which is now section 143a--2(4). The court concluded that
the drafters' intent in providing underinsured-motorist
coverage was to "fill the gap between the claim and the
tortfeasor's insurance" and to prevent the insured from
recovering amounts from the insurer over and above the
coverage provided by the underinsured-motorist policy.
Sulser, 147 Ill. 2d at 556. The court provided an example
of how underinsured-motorist coverage was to work,
stating that if the insured recovered $50,000 through the
tortfeasor's insurance policy, he or she would be
entitled to a payment of $50,000 under a $100,000
underinsured-motorist policy. Sulser, 147 Ill. 2d at 557.
The court concluded that in enacting the underinsured-
motorist statute, "the legislature avoided the absurdity
of a situation where a policyholder would receive fewer
benefits in the fortuitous event of being injured by an
underinsured rather than by an uninsured motorist."
Sulser, 147 Ill. 2d at 557.
If the position of Country Mutual were to be
adopted, this purpose would be frustrated. Under Country
Mutual's analysis, plaintiff could only receive $35,000
from the at-fault motorist who injured him. Cummins would
be prevented from receiving payment of the $15,000 gap
between his underinsured-motorist coverage and the
tortfeasor's liability coverage. However, if the liable
driver who caused Cummins' injuries had been completely
uninsured, Cummins would be entitled to the full $50,000
individual limit of his uninsured-motorist policy. The
very situation the legislature is trying to avoid would
be realized under Country Mutual's construction of
section 143a--2(4).
We agree with Sulser and the appellate court that
it would be absurd to allow Cummins to receive fewer
benefits after being injured by an underinsured driver
rather than an uninsured driver. 281 Ill. App. 3d at 12.
Sulser recognizes that the very purpose of underinsured-
motorist coverage is to cover the shortfall between the
amount of insurance contracted for and the amount
received from the liable driver. To achieve this purpose,
motorists must be considered "underinsured" when the
amount of liability insurance they actually pay out is
less than the amount of underinsured-motorist coverage a
policyholder obtains.
Further, in determining when coverage is
appropriate, this court can also consider a
policyholder's reasonable expectations and the coverage
intended by the insurance policy. See Hoglund v. State
Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272,
279 (1992). In this case, premiums were paid for $50,000
of underinsured-motorist coverage and plaintiff
reasonably expected coverage for damages caused by an
underinsured motorist up to that amount. In addition,
Country Mutual's insurance policy was intended to provide
coverage for damages caused by an underinsured motorist
and to place plaintiff in the same position as if the at-
fault driver had adequate insurance. If Country Mutual's
interpretation of the underinsured-motorist policy were
adopted, the underinsured-motorist protection contracted
for would no longer be available. In effect, the
policyholder would be denied substantial economic value
in return for the premiums paid. See Hoglund, 148 Ill. 2d
at 278.
The language and intent of the underinsured-motorist
statute, as well as the policyholder's reasonable
expectations, indicate coverage when there is a gap
between the amount actually recovered from the liable
motorist and the underinsured-motorist policy limit. We
follow the statutory language and the legislative intent
recognized by this court in Sulser and find that
"underinsured" must be defined by comparing the amount of
underinsured-motorist coverage to the amount of liability
coverage actually recovered from the at-fault driver. To
the extent that the amount of liability insurance
actually recovered is less than the amount of
underinsured-motorist coverage, the liable driver is
considered underinsured.
Here, the limits of liability coverage were
identical to the limits of plaintiff's underinsured-
motorist coverage, but plaintiff recovered less than the
available limits. Plaintiff received $35,000 in a court-
approved, good-faith settlement from the at-fault
driver's liability insurance. Plaintiff had a higher
level of underinsured-motorist coverage in the amount of
$50,000 per person and his damages exceeded this amount.
Therefore, we hold that the at-fault driver was
underinsured, and plaintiff is entitled to underinsured-
motorist coverage. Under Sulser, plaintiff needs $15,000
to "fill the gap" between his underinsured coverage
limits and the amount of liability insurance actually
recovered. We conclude that plaintiff is entitled to
state a claim for $15,000 in underinsured-motorist
benefits.
For the foregoing reasons, the judgment of the
appellate court is affirmed.
Affirmed.
CHIEF JUSTICE FREEMAN, specially concurring:
Like my colleagues in the plurality, I believe that
Country Mutual Insurance Company is obligated to pay its
insured's claim for underinsured-motorist coverage. I
cannot, however, ascribe to the rationale employed by the
plurality in reaching that conclusion. Rather, I would
take a different approach to resolving this case, one
which more fully comports with the intent of the General
Assembly when it drafted section 143a--2(4) of the
Illinois Insurance Code.
I
The dispositive issue in this case is whether
Cummins is entitled to underinsured-motorist coverage
under Illinois law. The resolution of this issue turns
upon the definition of the term "underinsured motor
vehicle" found in section 143a--2(4). That provision
provides in pertinent part:
"[T]he term `underinsured motor vehicle'
means a motor vehicle whose ownership,
maintenance or use has resulted in bodily
injury or death of the insured, as defined in
the policy, and for which the sum of the
limits of liability under all bodily injury
liability insurance policies or under bonds or
other security required to be maintained under
Illinois law applicable to the driver or to
the person or organization legally responsible
for such vehicle and applicable to the
vehicle, is less than the limits for
underinsured coverage provided the insured as
defined in the policy at the time of the
accident. The limits of liability for an
insurer providing underinsured motorist
coverage shall be the limits of such coverage,
less those amounts actually recovered under
the applicable bodily injury insurance
policies, bonds or other security maintained
on the underinsured motor vehicle." 215 ILCS
5/143a--2(4) (West 1992).
A careful review of the foregoing language reveals that
section 143a--2(4) establishes a two-part inquiry which
must be utilized in determining whether an insured is
entitled to underinsured-motorist coverage in any given
case. The first step of the inquiry requires us to
determine whether the "motor vehicle whose ownership,
maintenance or use has resulted in bodily injury or death
of the insured" is, in fact, an "underinsured motor
vehicle." 215 ILCS 5/143a--2(4) (West 1992). To that end,
the first sentence of section 143a--2(4) tells us that
such a vehicle is so defined when its limits of liability
are "less than the limits for underinsured coverage
provided the insured" in his or her underinsurance policy
at the time of the accident. (Emphasis added.) 215 ILCS
5/143a--2(4) (West 1992). Once the vehicle qualifies as
an underinsured motor vehicle under the first sentence of
the statute, the second step of the inquiry requires us
to next determine how much recovery, if any, is to be
permitted to the insured from his or her underinsurance
carrier. The second sentence of the statute provides the
answer--recovery is limited to "the limits of [the
underinsured policy] less those amounts actually
recovered under the applicable bodily injury insurance
policies, bonds or other security maintained on the
underinsured motor vehicle." 215 ILCS 5/143a--2(4) (West
1992). Put another way, the second sentence of the
underinsured-motorist statute limits the underinsured-
motorist payment to the limit of the underinsured
coverage, less any proceeds received from the at-fault
driver's policy.
Applying this two-step inquiry to the facts in this
case, it becomes readily apparent that the vehicle which
injured Cummins is not, in fact, an underinsured vehicle,
at least according to a strict or literal reading of the
definition of such a vehicle as set forth in the first
sentence of section 143a--2(4). This result obtains
because Cummins' underinsured policy limits, i.e.,
$50,000 per person/$100,000 per accident, are equal to
the liability limits carried by the at-fault driver,
i.e., $50,000 per person/$100,000 per accident. Thus,
because the at-fault driver's vehicle does not qualify as
an underinsured motor vehicle under the first sentence of
section 143a--2(4), there is no need to look to the
second sentence which pertains to the amount Cummins is
entitled to recover.
The plurality, however, ignores the plain language
of the first sentence of section 143a--2(4) and, looking
to the second sentence, declares that the statute
"recognizes that injured parties may recover the
difference between their underinsured-motorist policy
limits and the amount they actually recover from the at-
fault driver's liability insurance." Slip op. at 6.
Having conflated the two sentences, and thereby
obliterating the two-step inquiry established in the
statute, my colleagues insist that the first sentence
cannot prevent a recovery of insurance proceeds "when the
very next sentence authorizes the recovery." Slip op. at
6. I, however, cannot concur in the plurality's assertion
that the second sentence "authorizes the recovery." As I
pointed out above, it is the first sentence of section
143a--2(4), and the first sentence alone, which controls
the inquiry into whether the at-fault vehicle can be
deemed an "underinsured motor vehicle." Because there is
no underinsured vehicle involved in this case by
operation of that first sentence, the second sentence of
section 143a--2(4) is wholly irrelevant. For this reason,
I do not believe the plurality's analysis can withstand
scrutiny.
II
Having set forth the reasons why I consider the
plurality's interpretation of section 143a--2(4) to be
flawed, I will now explain why I believe that
underinsurance coverage is nevertheless mandated in this
case. This court has long recognized that the proper
interpretation of any statutory enactment cannot be based
solely upon the bare language of the statute in question,
but "must be grounded on the `nature, objects and the
consequences that would result from construing it one way
or the other.' " Mulligan v. Joliet Regional Port
District, 123 Ill. 2d 303, 313 (1988), quoting Carrigan
v. Illinois Liquor Control Comm'n, 19 Ill. 2d 230, 233
(1960). To that end, this court has cautioned that
" `[w]hen the literal enforcement of a statute would
result in great injustice and lead to consequences which
the legislature could not have contemplated, the courts
are bound to presume that such consequences were not
intended and will adopt a construction which it may be
reasonable to presume was contemplated by the
Legislature.' " People ex rel. Cason v. Ring, 41 Ill. 2d 305, 312-13 (1968), quoting Village of Glencoe v.
Hurford, 317 Ill. 203, 220 (1925). Accordingly, courts
will not construe a statute in such a way as to produce
an absurd result. Croissant v. Joliet Park District, 141 Ill. 2d 449 (1990).
The record in this case reveals that Cummins was not
the only claimant to the proceeds available under the at-
fault driver's liability policy. In fact, the other
claimants had already exhausted those proceeds by the
time Cummins received his court-approved, good-faith
settlement from the at-fault driver. Therefore, although
a face-value comparison may well reveal that Cummins'
underinsured-motorist limits and the at-fault driver's
liability limits are equal on paper, those amounts, in
reality, are unequal due to the fact that the at-fault
driver's resources have been depleted by the previous
payouts to the other claimants to the policy. Under these
circumstances, an absurd and unfair result obtains when
the precise language in the first sentence of section
143a--2(4) is applied to Cummins. This is best reflected
in a example given by Justice Maag in his special
concurrence to the appellate court's opinion in this
case:
"Assume that an automobile accident
occurs. Assume further that the driver of
vehicle `A' is negligent and is the cause of
the accident. The driver of vehicle `A'
carries $25,000 in liability coverage. The
driver of vehicle `B' carries $25,000 in
underinsured motorist coverage. Finally,
assume that in vehicle `B' there is one
passenger along with the driver of vehicle
`B.' If the passenger in vehicle `B'
immediately files suit and is awarded $25,000,
and if the judgment is paid in full by driver
`A' 's liability policy, then there would be
no coverage left under driver `A' 's policy to
pay a judgment later rendered in favor of the
driver of vehicle `B.' The driver of vehicle
`B,' despite having paid his insurance premium
dutifully, would not be entitled to recover
anything under his own underinsured motorist
coverage if the position of Country Mutual in
the instant case was adopted." (Emphasis
omitted.) 281 Ill. App. 3d 5, 15 (Maag, J.,
specially concurring).
I simply cannot believe that the legislature intended
underinsured-motorist coverage in this state to be
dependent upon the fortuity of being involved in an
accident in which only a single person is injured and
hence only a single claim is made against the at-fault
driver's liability policy. I should also point out that,
under the above hypothetical, the driver of vehicle "B"
would have been in a better position had the driver of
vehicle "A" been uninsured. At least then driver "B"
could have recovered benefits pursuant to his or her
uninsured-motorist coverage. Such results, of course, are
absurd. They also contravene, rather than further, the
General Assembly's stated purpose in drafting section
143a--2(4).
My research into the legislative history of section
143a--2(4) reveals that the statutory requirement that
insurance companies offer underinsured-motorist coverage
grew out of legislators' desire to provide compensation
for victims of inadequately insured motorists. The
General Assembly designed underinsured-motorist coverage
so that consumers could have the "opportunity to protect
[themselves]" from at-fault drivers who carry only
minimal amounts of liability insurance. 81st Ill. Gen.
Assem., House Proceedings, June 20, 1980, at 48
(statements of Representative Epton). For this reason,
the legislation was regarded as one which acted on
"behalf of the consumer." 81st Ill. Gen. Assem., House
Proceedings, June 20, 1980, at 48 (statements of
Representative Epton). Specifically, the legislature
intended to put the injured insured in the same position
he or she would have occupied had the at-fault driver
carried liability coverage equal to the insured's
underinsured-motorist coverage. 81st Ill. Gen. Assem.,
House Proceedings, June 20, 1980, at 44-45 (statement of
Representative Telcser). This was done in order to "fill
the gap between the claim [of the injured insured] and
the amount available from the underinsured." 81st Ill.
Gen. Assem., House Proceedings, June 20, 1980, at 44-45
(statement of Representative Telcser). Each of these
objectives is thwarted, however, if the definition of an
"underinsured motor vehicle" is given its literal meaning
in a situation where, as in this case, multiple claimants
are involved. Significantly, the legislative debates are
devoid of any indicia that the members of the General
Assembly ever addressed or considered the somewhat
infrequent multiple-claimant situation with which we are
confronted today.
In view of the foregoing, I believe that in
situations involving multiple claimants, a literal
interpretation of section 143a--2(4) "would result in
great injustice and lead to consequences which the
legislature could not have contemplated" or intended.
Ring, 41 Ill. 2d at 312. Accordingly, I believe that in
such cases, the judiciary is "bound to *** adopt a
construction which [may] be reasonable to presume was
contemplated by the legislature." Ring, 41 Ill. 2d at
313. In order to do so, we must construe the first
sentence of section 143a--2(4) so that the vehicle of the
at-fault driver will be deemed an "underinsured motor
vehicle" whenever the amount of that driver's liability
coverage becomes less than the amount of the insured's
underinsured-motorist coverage because of a payment of
proceeds to other claimants. Only in this way can we be
certain to effectuate the General Assembly's intent in
enacting underinsured-motorist legislation and, at the
same time, avoid the absurd results which occur whenever
multiple claimants are involved. Applying my analysis to
the facts of the present case, the vehicle of the at-
fault driver should be considered an "underinsured motor
vehicle" with respect to Cummins. In my opinion, it is
this interpretation of section 143a--2(4), and not the
interpretation proffered by the plurality, that obligates
Country Mutual Insurance Company to pay Cummins' claim
for underinsured-motorist coverage in this case.
JUSTICE McMORROW joins in this special concurrence.
JUSTICE HEIPLE, dissenting:
The Illinois General Assembly has explicitly
rejected the policy adopted today by this court. The
other opinions fail to discuss or even mention this fact.
Instead, the court engages in what can only be described
as an act of judicial legislation, defying the will of
the people as expressed through their elected
representatives. I therefore respectfully dissent.
The court today requires that an automobile insurer
pay up to the full amount of underinsured-motorist
coverage specified in its policy whenever an insured
sustains losses which are not fully covered by the
liability insurance of the driver at fault. This
requirement was once mandated by the General Assembly.
Section 148a--1 of the Illinois Insurance Code, effective
March 1, 1980, provided as follows:
"Under underinsured motorist coverage the
insurer agrees to pay damages the insured
would be legally entitled to recover, but
which are uncompensated because the total
damages exceed the liability coverage limits
of the owner of the at-fault vehicle." Pub.
Act 81--1202, eff. March 1, 1980.
This statute codified the policy adopted by the
plurality, basing underinsured-motorist liability on the
damages sustained by the insured.
This statute was subsequently repealed and replaced
with the current version:
"[T]he term `underinsured motor vehicle'
means a motor vehicle *** for which the sum of
the limits of liability under all bodily
injury liability insurance policies *** is
less than the limits for underinsured coverage
provided the insured *** at the time of the
accident." 215 ILCS 5/143a--2(4) (West 1994).
The new statute changed the basis of underinsured-
motorist liability from the insured's damages to the
relative limits of liability specified in the policies of
the parties involved in the accident. By continuing to
base underinsured liability on the insured's damages, the
plurality simply defies the legislature's repeal of the
earlier version of the statute.
Until the Fifth District's decision in this case,
every Illinois court which had considered the current
version of the statute, including a previous panel of the
Fifth District, agreed that the provision makes
underinsured coverage contingent on the limits of
liability specified in the policies of those involved in
the accident. See Golladay v. Allied American Insurance
Co., 271 Ill. App. 3d 465, 467-68 (1st Dist. 1995);
Illinois Farmers Insurance Co. v. Tabor, 267 Ill. App. 3d
245, 250 (2d Dist. 1994); Purlee v. Liberty Mutual Fire
Insurance Co., 260 Ill. App. 3d 11, 26 (5th Dist. 1994);
Moriconi v. Sentry Insurance of Illinois, Inc., 193 Ill.
App. 3d 904, 908 (4th Dist. 1990). For example, the court
in Golladay held:
"The determination of whether a tortfeasor's
vehicle is underinsured is made by comparing
the limits of liability insurance for bodily
injury applicable to that vehicle with the
limits of the injured person's UIM
[underinsured motorist] coverage. [Citation.]
It is only when the tortfeasor's coverage
limits are less than the injured party's UIM
coverage that the tortfeasor's vehicle meets
the statutory definition of an `underinsured
motor vehicle.' " Golladay, 271 Ill. App. 3d
at 467-68.
Each of the appellate opinions cited above specifically
rejected the construction of the statute advanced by the
plurality. Today this court overrules these decisions
solely by virtue of superior authority, not superior
analysis.
The plurality seeks support for its position in the
second sentence of section 143a--2(4) of the Insurance
Code:
"The limits of liability for an insurer
providing underinsured motorist coverage shall
be the limits of such coverage, less those
amounts actually recovered under the
applicable bodily injury insurance policies
*** maintained on the underinsured motor
vehicle." 215 ILCS 5/143a--2(4) (West 1994).
The plurality asserts that this sentence of the statute
"recognizes that the recoverability of proceeds must be
considered when calculating the liability of an insurer
who provides underinsured motorist coverage." The
plurality concludes that "[t]herefore, the amount
actually recovered may be the appropriate figure to be
used in determining whether a vehicle is underinsured."
Slip op. at 5.
Such a reading of the second sentence of section
143a--2(4) is wholly unwarranted and completely
insupportable. That provision merely grants an insurer
who is liable for underinsured-motorist coverage a set
off for the amount of proceeds the plaintiff actually
recovers from the at-fault driver's liability insurance.
Whether the insurer is liable for underinsured coverage
in the first place, however, is an entirely separate
question, which is answered by comparing the limits
specified in the insurance policies held by those
involved in the accident. As one court has explained:
"The application of section 143a--2(4) first
requires a determination of whether the tort-
feasor's vehicle is `underinsured' based on
the definition provided. The set-off clause
mandating the reduction of UIM payments by the
amounts received from the tort-feasor operates
only if the tort-feasor's vehicle is
classified as underinsured." Illinois Farmers
Insurance Co. v. Tabor, 267 Ill. App. 3d 245,
250 (1994).
As noted above, until the instant case, this
straightforward reading of the statute was the unanimous
conclusion of courts which had considered this issue.
Although the General Assembly has had ample opportunity
to disturb these decisions through recent amendments to
section 143a--2, it has declined to do so.
Both the plurality and the special concurrence offer
several potentially persuasive reasons for the State of
Illinois to require that an automobile insurer pay the
underinsured-motorist coverage specified in its policy
whenever the insured sustains losses which are not fully
covered by the liability insurance of the driver at
fault. The arguments contained in these opinions might
very well convince legislators that the state should once
again adopt such a requirement. Unfortunately, however,
rather than allow legislators to decide this question,
the court instead arrogates unto itself the legislative
function, imposing by judicial fiat a requirement the
General Assembly has specifically repealed. Because I
believe that the current Illinois Insurance Code cannot
possibly be read to contain such a requirement, I
respectfully dissent.
JUSTICE MILLER joins in this dissent.
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