Illinois follows an “at-fault” rule when it comes to car accidents. Put simply, if you are injured in an accident caused by a negligent driver, that driver is financially responsible for both your personal injuries and property damage. To that end, Illinois law requires all drivers to carry a minimum amount of liability insurance to cover potential accidents.
Of course, not everyone follows the law. By some estimates, as many as 15 percent of drivers on Chicago’s streets lack auto insurance of any kind. There are also many car accidents involving “hit and run” scenarios where the negligent driver is never identified. So what can car accident victims do in these situations?
If the victim has their own auto insurance policy–or is covered by such a policy–they can likely take advantage of that policy’s “uninsured motorist” (UM) benefits. As the name suggests, UM coverage applies to cases where the insured is hit by a driver who lacks auto insurance. This includes unknown hit-and-run drivers.
Under Illinois law, all auto insurance policies automatically include UM coverage. You do not have to take any additional action or make a separate purchase of UM coverage, as is the practice in some other states. Typically, the amount of UM coverage available under a policy is the same as its liability coverage. So if you purchased just the minimum amount of liability coverage required by Illinois law, you would also have UM coverage of $25,000 per person or $50,000 per accident for personal injury.
One thing to check, however, is whether your current policy also covers property damage as well as accidents involving underinsured motorists. With respect to property damage, most standard UM policies do not cover the costs of repairing or replacing your car or other personal property that is damaged in a car accident. You may need to purchase separate property damage coverage. Similarly, your UM policy may not provide coverage for accidents where the other driver has insurance but it is not enough to fully compensate you for your injuries. These are known as “underinsured motorists.” Illinois law does not mandate underinsured motorist (UIM) coverage as it does UM coverage. So once again, you may need to purchase additional UIM coverage to protect you against such an accident.
Make Sure You Understand–and Comply With–Your UM or UIM Carrier’s Policies
Insurance policies are contracts. Indeed, insurance policies are typically long and complicated contracts, which most policyholders never take the time to read or fully understand before signing on the dotted line. But if you expect to receive UM or UIM coverage, you need to strictly comply with all of your policy’s requirements. An Illinois insurer will not hesitate to deny coverage due to a lack of compliance, even if your underlying claim has merit.
Consider this recent decision from the Illinois Fifth District Appellate Court. In McAteer v. USAA Casualty Insurance Company, the plaintiff purchased an insurance policy including underinsured motorist coverage from the defendant, USAA. The plaintiff was injured in a 2015 auto accident caused by a negligent driver. Nearly seven years later, in 2022, she received a $50,000 settlement check from the at-fault driver’s insurance company, which reflected the limits of the driver’s policy. Because this amount was not enough to pay all of the plaintiff’s medical bills arising from the accident, she subsequently filed a UIM claim with USAA.
According to the plaintiff, USAA never responded to her demand for coverage. She then filed a lawsuit in Illinois. The trial court ended up dismissing the case at the summary judgment stage, however, holding that USAA was entitled to judgment as a matter of law. Specifically, the judge agreed with USAA that the plaintiff failed to notify the insurer of her prior settlement with the at-fault driver, which was a necessary precondition for her claiming UIM benefits under the policy. The plaintiff’s failure to give the required notice effectively “extinguished” her right to UIM coverage.
On appeal, the Fifth District agreed with the trial court. The appellate judges noted that it was “undisputed” that the plaintiff failed to notify USAA of her settlement with the at-fault driver. The policy not only required such notice. It also required USAA’s consent to the terms of the settlement. In fact, the plaintiff was required to give written notice to USAA 30 days before any tentative settlement became final.
The plaintiff argued that her failure to provide notice of the settlement did not “prejudice” USAA and that she should therefore still be allowed to proceed with her claim. The Fifth District squarely rejected that argument. It noted that under binding precedent from the Illinois Supreme Court, an insurance company is not required to show prejudice with respect to delayed notice. To the contrary, even if the insurer was not prejudiced, the policyholder “must still give reasonable notice according to the terms of the insurance policy.”
UM/UIM Coverage and Subrogation in Illinois
One reason that uninsured and underinsured motorist insurers insist on notification of any potential settlement regarding an at-fault driver is the legal principle of subrogation. This refers to an insurer’s right to go after the negligent driver on their own initiative. For example, say you are involved in a car accident and you either decline to sue the at-fault driver or settle for less than the full amount of their insurance coverage. In that scenario, your UM/UIM carrier could sue the negligent driver themselves. But under Illinois law, subrogation is not an option when the UM/UIM carrier receives written notice of a settlement and gives its consent.
Contact a Chicago Car Accident Lawyer Today
Dealing with insurance companies, even your carrier, is often a complicated task that can easily trip you up. That is why it is important to work with a qualified Chicago car accident attorney who will review your policy and advise you of your rights. Contact Kennedy Watkins LLC today to schedule a free consultation.