Illinois Supreme Court Significantly Expands UM Automobile Coverage to Include Bicyclists Injured by an UM Vehicle
By Eli B. Vine
On November 30, 2023, the Illinois Supreme Court issued Carmen Galarza v. Direct Auto Insurance Company, No. 129031. In Galarza, the Supreme Court significantly expanded Uninsured Motorist (“UM”) coverage by holding that a minor bicyclist struck by an uninsured motorist qualified as an insured even though he was not in an insured vehicle at the time of the occurrence.
Named insured father filed an UM claim on behalf of his minor son stemming from a hit-and-run incident where the minor was allegedly struck by a motor vehicle while riding his bicycle. Father asserted that his minor son should be afforded UM coverage under the father’s automobile policy based on his status as a “relative” under the policy. The insurer denied coverage because the minor had not been an occupant of a covered vehicle at the time of the accident.
The insurer filed a declaratory judgement action in the Circuit Court obtained summary judgement in its favor. On appeal, the Appellate Court determined that the sole issue was whether the provision in the insurer’s policy that limits UM coverage to the insured occupying an insured vehicle under the policy violated the Illinois Insurance Code section addressing UM and hit-and-run motor vehicle coverage and thus was against public policy. The Appellate Court found that such limitations did violate the Illinois Insurance Code and therefore reversed and remanded the Circuit Court’s decision.
The Appellate Court reasoned that section 143a of the Insurance Code was expressly designed to broadly mandate UM coverage in order to protect individuals insured under an automobile liability policy and, when the insurer drafted the policy at issue, they “effectively evaded this requirement by requiring linking coverage to the insured’s occupancy of an automobile.” While the Appellate Court noted that insurers are not required to cover every possible loss and may limit their risks, UM coverage is required so that the insured is placed in substantially the same position if the insured would have been injured in an accident where the at fault party carried the minimum amount of liability coverage as required by law.
The Supreme Court analyzed the UM coverage section under the Direct Automobile Insurance policy at issue, which defined the “insured,” in relevant part as (1) the named insured and (2) a “relative as defined under the policy. Further, the policy indicated that there would be potential coverage for a “hit-and-run motor vehicle, provided there was actual physical contact between the insured automobile and the hit-and-run motor vehicle.” Additionally, the hit-and-run motor vehicle was defined as “a motor vehicle which hits or causes an object to hit an owned automobile which the insured is occupying at the time of the accident.”
The Supreme Court ultimately agreed with the Appellate Court. It found that while the subject insurance policy did not provide UM coverage for the minor because he was not an occupant in an “insured automobile” at the time, this provision limiting UM coverage to insureds occupying an “insured automobile” violated section 143a of the Illinois Insurance Code (215 ILCS 5/143a) and thus is unenforceable as a matter of public policy. The Supreme Court reasoned that Section 143a of the Insurance Code requires a motor vehicle liability policy to also include UM coverage and found that looking at the plain language of Section 143a and its underlying public policy, the minor bicyclist was an insured under his father’s automobile liability policy. The Supreme Court determined the coverage question should be whether the injuries resulted out of the ownership, maintenance or use of the vehicle, including the uninsured at-fault vehicle, not whether the injured person occupied an insured vehicle at the time of the occurrence. The Supreme Court accordingly concluded that the bicyclist who was injured by an uninsured vehicle is a “person” whose injuries arose out of the ownership, maintenance, or use of “a motor vehicle” and thus qualified for coverage under the policy.
Learning Point: The Supreme Court’s decision significantly expands the coverage afforded to persons injured by an uninsured motorist — including those not occupying an insured vehicle — which likely will result in a significant increase in UM claims being made by insureds.