Court decisions

Court decisions

UM claim denied because trust is named insured

Commercial Union had issued an automobile policy to Tatarian Realty Trust; the policy provided for UM benefits. The trust was the only named insured. Harry Tatarian filed a claim for personal injuries he sustained as a pedestrian, when he was hit by a passing vehicle in Quincy, Illinois. Commercial Union denied the claim since he was not a named insured. The policy showed the only named insured as Tatarian Realty Trust.

The evidence showed that Harry Tatarian had applied for the policy on May 8,1989, with the Gallagher Insurance Agency, which was one of Commercial Union’s agents. In order to obtain some tax benefits, he had placed the title to his car in the name of the trust, and the policy issued by Commercial Union provided coverage for “anyone” injured while occupying the covered vehicle.

The policy also provided coverage to the “named insured” and “household members of the named insured” if injured as a “pedestrian.” Tatarian was the trustee and beneficiary of the trust, and the application for the policy showed he was the only one who drove the car. Tatarian filed suit against Commercial Union, and the trial court entered a summary judgment in his favor. Commercial Union brought this appeal.

On appeal, the court found that the trial court erred in granting Tatarian a summary judgment. In this case, the policy provided UM coverage in instances where the named insured was injured as a pedestrian by a UM vehicle. Tatarian was not the named insured in the policy and could not recover. He argued that, under the circumstances, he had a reasonable expectation of coverage; but the higher court disagreed since the plain language of the policy showed only the trust as the named insured, regardless of the fact that the beneficiaries exercised control, and the trustee’s power was limited.

The judgment entered in the trial court was reversed, and the action was remanded for entry of judgment in favor of Commercial Union. Harry Tatarian, individually and as trustee, v. Commercial Union Insurance Company et al.No. 95-P-646-November 26,1996-672 North Eastern Reporter 2d 997.

Car dealer’s policy pays for test drive accident

On March 29,1994, Rodney Luckhart was test-driving a 1994 Jeep Cherokee owned by Joyce Pontiac GMC, when he rearended an auto owned by Vivian Carter and driven by Raun Calinee. Both of them were injured, and the vehicle was damaged. At that time, Luckhart had a personal auto policy which had been issued to him by State Farm, and the latter settled the Carter and Calinee claims for $9,092.15. Luckhart signed a subrogation agreement.

State Farm then brought this action against Joyce Pontiac GMC, Jeep-Eagle, and Toyota, Inc., and Universal Underwriters Group in an effort to recover the amount it had paid to the claimants. Its complaint alleged that Universal had refused to pay the claims under its Garage policy.

Universal appealed from the entry of judgment in the trial court in favor of State Farm.

The higher court decided the issue before it was whether Mr. Luckhart was an insured under the GARAGE policy issued by Universal at the time of the accident. That policy provided that an insured was “any other person…required by law to be an INSURED while using an AUTO covered by this Coverage Part within the scope of YOUR permission.”

Recent decisions showed that the mandatory insurance provision of the Illinois statute was not clear as to whether the operator, or the owner of the vehicle was required to have insurance. The court noted that Universal could have made a distinction in its policy and it did not do so. The court pointed out that had Mr. Luckhart been without personal auto insurance, the garage policy would have covered him. Therefore, the court ruled that Universal was the primary carrier in this instance and State Farm was the excess carrier.

The judgment entered in the lower court in favor of State Farm and against Universal for the amount of the claims paid by State Farm was affirmed.

State Farm Mutual Automobile Insurance Company, as Subrogee of Rodney Luckhart v. Universal Underwriters Group, Appellant, et al.-No. 2-95-1360-Appellate Court of Illinois, Second District-November 7,1996 (Rehearing denied Jan. 14, 1997)-674 North Eastern Reporter 2d 52.

Death benefit included only if requested

Howard Hall died in an accident in August 1988, when his car was hit by one driven by Lisa Burger and owned by Robert Hedrick. Hall’s widow, and administrator of his estate, settled with the companies insuring Burger and Hedrick for the maximum limits of each policy ($50,000 and $25,000 respectively).

Howard Hall and his wife had four separate policies on cars owned by them and issued by Country Mutual. Each policy provided for both UM and UIM coverage. The car driven by Howard at the time of the accident had a limit of $50,000 UIM coverage. His widow tried to “stack” that policy with another one with a $100,000 UIM limit, but the trial court ruled that Country Mutual could apply the “offset” provision in the policy in making payments to the widow. Since $100,000 was the highest limit of the insured’s policies, the company paid Mary $25,000, the amount it said it owed after it offset the $75,000 which Mary had received from the other companies.

The higher court found that the company could offset only one of the settlements received from the driver and owner of the other car.

The policies issued by Country Mutual also provided that, upon request of the applicant and by the payment of $1 per $5,000 of coverage, the company would provide a death benefit. Such coverage was included in the other three policies but had not been included in the policy covering the vehicle driven by Howard. Mary contended that the agent should have included that coverage since he knew, or should have known, that the couple’s other policies had that provision.

The trial court granted judgment in favor of the company, and Mary appealed.

The record failed to show any evidence that either Howard or Mary had asked for the death coverage. To the contrary, Mary had signed the application, and the blank for the death benefit had not been completed, and no premium was shown.

Under the Illinois Dead Man’s Statute, the agent could not testify. There was no witness to show that Howard or Mary had requested the death coverage. There was nothing to indicate that the agent had been requested to include that coverage, and Mary had signed the application which did not include that benefit.

The judgment entered in the trial court was affirmed as to the applicability of the “anti-stacking” law, was reversed as to the double offset applied by the company, and was dismissed as to any liability on the part of the agent. Mary E. Hall, Administrator of the estate of Howard E. Hall, et al. v. Lisa A. Burger et al. (Country Mutual Insurance Company)-No. 4-950195-Appellate Court of Illinois, Fourth District-January 31, 1996Rehearing denied February 28, 1996-660 North Eastern Reporter 2d 1328.

Car rental agency not required to offer UM, UIM

Ronald Beck had rented a car from Budget Rent-A-Car and Sears, Roebuck, on October 8, 1993. At the same time, he also purchased supplemental insurance offered by Budget. Philadelphia Insurance had issued the supplemental insurance offered to renters, but its coverage did not include UM and UIM coverage. Three days later, Beck was driving the car when an accident occurred involving an uninsured, or underinsured, motorist.

Beck filed this class action against Budget, Sears and Philadelphia Insurance. Beck’s principal argument was that Budget had failed to offer him, and others similarly situated, UM and UIM coverage as required by the Illinois statute. On the other hand, Budget and Sears contended that they were self-insurers and, as such, were under no obligation to offer such coverage to renters of their vehicles. The trial court granted the motions to dismiss filed by Budget and Sears, and Beck appealed.

The higher court agreed that, as self-insurers, Budget and Sears were under no obligation to initially offer or provide UM and UIM coverage. The only question, the court said, was whether Beck’s purchase of supplemental insurance as part of the rental contract imposed such an obligation upon Budget, Sears or Philadelphia.

The certificate of self-insurance given Beck along with the rental agreement provided only for a higher limit of liability, and nothing suggested that either company would issue an insurance policy.

Finally, the rental agreement plainly provided that the renter “EXPRESSLY WAIVES UNINSURED AND UNDERINSURED MOTORIST, SUPPLEMENTAL NO-FAULT AND OTHER OPTIONAL COVERAGES.”

The higher court found that Budget, Sears and Philadelphia were not obligated to issue UM and UIM coverage and could not be held liable to Beck for his loss.

Ronald Beck, Individually and as Representative of a Class of Similarly Situated Persons, Appellant v. Budget Rent-A-Car, et al.-No. 1-95-1849Appellate Court of Illinois, First District, Fourth Division-September 5,1996-669 North Eastern Reporter 2d 1335.

Copyright Rough Notes Co., Inc. Jun 1997

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