Courts Should Protect Insureds Against the Fine Print

Boguslaw Marchwiany of Chicago was waiting to make a left-hand turn onto Mannheim Road in Bellwood. Another vehicle driven by Kashonda Milliner collided with a third vehicle being driven by Peter Gonzalez, which rammed into Marchwiany’s car, killing him. He left a wife and four children. Marchwiany was insured under an Illinois Farmers Insurance Co. policy that provided automobile insurance coverage for underinsured motorists.

Marchwiany’s widow filed a lawsuit alleging counts under the Survival Act and the Wrongful Death Act on behalf of herself and her children. The Farmers policy provided uninsured and underinsured motorist coverage with $100,000 limits per person and $300,000 per occurrence. Gonzalez tendered his $100,000 policy liability limits and Milliner paid $19,000 of his policy’s $20,000 liability limits to settle the claims. The family received $80,000 of underinsured coverage payments from another policy in redress for Milliner’s negligence.

The issue before the court is whether the $300,000 per-occurrence limit or the lesser $100,000 per-person limit applies under the language of the Farmers policy that covered Marchwiany. The trial court found for the insurance company on its motion for summary judgment.

On appeal, the court discussed Roth v. Illinois Farmers Insurance Co., 324 Ill.App.3d 293, 754 N.E.2d 439 (5^th Dist. 2001), and noted that the case turned on critical language in the policy, as most of these cases do. Illinois Farmers Insurance Co. v. Marchwiany, 361 Ill.App3d 916, 838 N.E.2d 172 (1^st Dist. 2005). Based on the identical Farmers policy language, the court in Roth held that the $300,000 per-occurrence limit applied. Despite this holding, however, the Appellate court in Marchwiany held that the $100,000 per-person limit applied.

Yet another case. Illinois Farmers Insurance Co. v. Hall, et al., No. 1-05-0161 (1^st Dist. 2006), deals with identical language. Again, the injured plaintiff sustained damages in excess of the per-person limit and argued that the per-occurrence limit should instead apply where there are bodily-injury and loss-of-consortium claims.

It is noteworthy to mention that in all three of these cases, the per-occurrence limit is specifically made "subject to" the per-person limit in the Liability section of the policy; yet, significantly, the "subject to" language is omitted in the Uninsured/Underinsured portion of the policy. This omission can mean only that the insurance company intentionally did not want the per-person limit to apply, and that the higher per-occurrence limit is in effect when dealing with uninsured/underinsured situations where similar claims are made.

Farmers would have one quit reading the policy at the definition state of per-person limits, which states that "The uninsured motorist bodily injury limit for each person is the maximum we will pay for all damages resulting from bodily injury sustained by one person in any one accident or occurrence. Included in th is limit, but not as one separate claim or claims, are all the consequential damages sustained by other persons, such as loss of services, loss of support, loss of consortium, wrongful death, grief, sorrow, and emotional distress."

But the court in Roth astutely pointed out that the policy must be read as a whole, and if the insurance contract contains conflicting clauses, the clause that provides greater or more inclusive benefits for the insured will govern. Sentry Insurance v. Hogan, 111 Ill.App.3d 638, 640, 444 N.E.2d 761, 763 (1^st Dist. 1982).

Importantly, Roth pointed out that the per-occurrence limit of the Farmers policy was not made subject to the per-person limit and stated that, "Because we find that both the per-person clause and the per-occurrence clause define coverage applicable to the claims asserted by plaintiff, the policy is ambiguous." Id. at 296, 754 N.E.2d at 443-44.

Therefore, under well established contract law, the court found against the drafter of the policy, the insurance company.

The Roth court went on to say that the fact that the per-occurrence limit was not made "subject to the per-person limits" clearly indicates that the drafter meant to "provide broader coverage in those situations where the language is absent." Id.

The insurance policy in Hall contained identical language, and the Circuit Court recognized that important comparison, granting summary judgment for Hall. Yet, on appeal, the Illinois Appellate court held that, "Construing all of the terms of the uninsured motorist limits-of-liability provisions, we determine that only one reasonable interpretation of the limits-of-liability provisions exists and reject the Roth court’s finding of ambiguity."

It is clear that the circuit courts are split over whether the per-person or per-occurrence limit applies, and it will be left to the Illinois Supreme Court to decide in Marchwiany, or to stay its ruling until the Supreme Court has spoken. Certainly, there is a need for consistency when interpreting the same language.

It is important to note that the general rule in contracts is that they should be construed as a whole with any ambiguity being construed against its drafter. Des los Reyes v. Travelers Insurance Co., 135 Ill.2d 353, 358, 553 N.E.2d 301, 304 (1990).

Farmers’ reading of its own policy is quite self-serving and inaccurate. If only the per-person definition is to apply, as Farmers argues, then other provisions in the same Underinsured Motorists Limits of Coverage section also would not apply under Farmers’ skewed argument. But that would lead to absurd results, such as in cases were the plaintiff previously made workers’ compensation recoveries for those injuries. Under Farmers’ myopic argument, the insurer would not be entitled to the typical setoff it would seek because that provision would never be applied once the per-person limit was invoked and no other provisions in the policy could be considered.

Too often, insurers take advantage of insureds who pay premiums to a "name" insurer and just assume that the coverage is fair and reasonable. Instead, it comes down to reading the fine print when an accident occurs and the complicated insurance language suddenly becomes more meaningful. Insureds are then surprised to find the company that they’ve been so loyal to is instead finding ways to contort the language to avoid coverage and payment under the policy.

Hopefully, the Illinois Supreme Court will read the policies involved in this string of cases to give the insureds a full and fair reading.