Roberts v. Northland Ins. Co.
| Decision Date | 29 October 1998 |
| Docket Number | No. 84115,84115 |
| Parties | , 235 Ill.Dec. 579 Kirk ROBERTS, Appellant, v. NORTHLAND INSURANCE COMPANY et al., Appellees. |
| Court | Illinois Supreme Court |
Edward R. Durree, Kingery Durree Wakeman & Ryan, Peoria, for Kirk Roberts.
Craig L. Unrath, Heyl, Royster, Voelker & Allen, Peoria, for Northland Insurance Co.
David E. Krchak, Thomas, Mamer & Haughey, Champaign, for Chicago Motor Club Insurance Co. Justice HEIPLE delivered the opinion of the court:
Plaintiff Kirk Roberts appeals from a decision of the appellate court which reversed in part a declaratory judgment entered by the circuit court of Peoria County. The circuit court held that when a victim of an automobile accident is covered by two underinsured-motorist policies, each issued by a different insurance company, the amount of workers' compensation benefits received by the insured for the accident may be deducted only once from the insured's total coverage under the two policies. The appellate court reversed this holding, ruling that two deductions may be taken, one by each company. The appellate court affirmed, however, the circuit court's holding that neither company may deduct the amount of social security disability payments received by the insured. 291 Ill.App.3d 727, 226 Ill.Dec. 268, 685 N.E.2d 371. For the reasons that follow, we reverse the appellate court's holding regarding workers' compensation, but affirm as to social security disability.
Plaintiff was seriously injured in an accident while driving a truck in the course of his employment. The driver of another vehicle involved in the accident, Thomas Fortune, was insured under an automobile liability policy with limits of $50,000. Fortune's insurer paid plaintiff $50,000 pursuant to this policy. Plaintiff was also awarded $196,114.26 in workers' compensation benefits as a result of the accident. In addition, plaintiff was awarded social security disability benefits of approximately $300 per month.
At the time of the accident, plaintiff was covered by two separate insurance policies issued by defendants Chicago Motor Club Insurance Company and Northland Insurance Company. These policies provided underinsured-motorist coverage in the amounts of $300,000 and $500,000, respectively. All parties agree that Chicago Motor Club's policy was "primary" while Northland's policy was "excess," meaning that Northland was required to pay under its policy only after other applicable insurance, such as the Chicago Motor Club coverage, was exhausted.
The Chicago Motor Club policy contained the following provision:
"Amounts payable for damages under Under-Insured Motorists Coverage will be reduced by * * * the present value of all amounts payable under any workmen's compensation, disability benefits or similar law * * *."
The Northland policy contained a similar provision:
"Any amount payable for damages under this [underinsured] coverage shall be reduced by all sums paid or payable under any workers' compensation, disability benefits or similar law."
In correspondence with plaintiff, Chicago Motor Club and Northland asserted that each company was entitled to "set off," or reduce, its payments to plaintiff by the amount of workers' compensation and social security disability benefits awarded to plaintiff for the accident. Plaintiff thereupon filed a declaratory judgment action in the circuit court of Peoria County to determine whether defendants could legally claim the workers' compensation and social security disability setoffs. Plaintiff alleged in his complaint that his damages exceeded $1 million.
The circuit court concluded that it was impermissible for both insurance companies to apply setoffs for the full amount of plaintiff's workers' compensation benefits. The court reasoned that because plaintiff received only one workers' compensation payment, only one setoff in the amount of that payment should be allowed. The court ruled that to enforce the literal language of each policy by applying two setoffs would create an unfair windfall for the insurers in violation of public policy.
The circuit court further held that the single setoff for workers' compensation benefits should be applied first to payments made to plaintiff by the primary insurance carrier, Chicago Motor Club. Because the amount of the workers' compensation setoff was less than the amount of plaintiff's coverage under the Chicago Motor Club policy, the circuit court ruled that the entire setoff should be Finally, the circuit court ruled that no setoff would be allowed by either insurer for social security disability payments received by plaintiff, citing Pearson v. State Farm Mutual Automobile Insurance Co., 109 Ill.App.3d 649, 65 Ill.Dec. 215, 440 N.E.2d 1070 (1982).
[235 Ill.Dec. 581] applied to Chicago Motor Club, and none of it to Northland.
The appellate court reversed the circuit court's judgment with regard to the workers' compensation setoff. The appellate court held that because the Chicago Motor Club and Northland insurance policies were separate, the setoff provisions in each should be applied separately. The court acknowledged that if, instead of purchasing one $300,000 policy and one $500,000 policy, plaintiff had instead purchased a single $800,000 policy, only a single setoff would apply. Nevertheless, the court held that because it knew of no Illinois law requiring setoffs to be applied to primary carriers only or multiple policies to be treated as one combined policy, each defendant was entitled to enforce the terms of its own policy by deducting the full amount of the workers' compensation benefits from plaintiff's coverage under each policy.
The appellate court affirmed, however, the circuit court's ruling that no setoff is allowed for social security disability benefits. The appellate court noted that, while a recipient of workers' compensation is required to reimburse the workers' compensation carrier for any amounts recovered from a tortfeasor, no such reimbursement is required in the case of social security benefits. Consequently, the court concluded, a setoff by the underinsured carrier for social security disability benefits received by the plaintiff would be unjustified.
We allowed plaintiff's petition for leave to appeal the appellate court's holding regarding the workers' compensation setoff. 166 Ill.2d R. 315. In addition, defendants have requested cross-relief reversing the appellate court's holding regarding the social security disability setoff. 166 Ill.2d R. 315.
The construction of an unambiguous insurance policy provision is a question of law subject to de novo review. Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill.2d 520, 529, 211 Ill.Dec. 459, 655 N.E.2d 842 (1995); Quake Construction, Inc. v. American Airlines, Inc., 181 Ill.App.3d 908, 913, 130 Ill.Dec. 534, 537 N.E.2d 863 (1989). The terms of an insurance policy are to be applied as written unless those terms contravene public policy. Illinois Farmers Insurance Co. v. Cisco, 178 Ill.2d 386, 392, 227 Ill.Dec. 325, 687 N.E.2d 807 (1997).
Plaintiff contends that allowing both insurance companies to deduct the full amount of his workers' compensation benefits from the coverage limits of the two underinsured-motorist policies would violate public policy. Plaintiff notes that this court has held that the purpose of underinsured-motorist coverage is "to place the insured in the same position he would have occupied if injured by a motorist who carried liability insurance in the same amount as the policyholder." Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 558, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992). Plaintiff points out that if the tortfeasor in the instant case had carried liability insurance in the same amount as he, he could have recovered $800,000 from the tortfeasor's insurance carrier. Plaintiff then would have been required to reimburse his workers' compensation carrier for the $196,114.26 in benefits he received, leaving him with a net insurance settlement of $603,885.74. Plaintiff argues that because underinsured-motorist coverage is intended to simulate the situation just described, his net settlement in the instant case should likewise be $603,885.74. Under the appellate court's holding permitting two setoffs, however, plaintiff's net settlement would instead be $407,771.48.
Defendants counter that an insurance contract must be construed so as to give effect to the intention of the parties as expressed in the agreement. de los Reyes v. Travelers Insurance Cos., 135 Ill.2d 353, 358, 142 Ill.Dec.
[235 Ill.Dec. 582] 787, 553 N.E.2d 301 (1990). Defendants note that their respective policies clearly provide that underinsured-coverage payments be reduced by the amount of workers' compensation benefits received by the insured. In arguing that this unambiguous policy language must be enforced, defendants assert that plaintiff simply made a mistake in purchasing insurance coverage: rather than purchasing one policy with $800,000 in coverage, to which only one setoff would apply, he instead purchased two policies, with coverages of $300,000 and $500,000, respectively. Because plaintiff purchased two policies, defendants contend his coverage is subject to two setoffs. Defendants argue that enforcing the literal language of the two policies does not violate public policy because plaintiff was free to purchase one policy instead of two.
We first note that underinsured-motorist coverage is a statutory creation. Section 143a-2(4) of the Illinois Insurance Code requires automobile insurers to include underinsured-motorist coverage in policies they issue. 215 ILCS 5/143a-2(4) (West 1992). The purpose of underinsured-motorist coverage is to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance. Cummins v. Country...
To continue reading
Request your trial
-
Ruebe v. Partnerre Ir. Ins. DAC, Case No. 18-cv-01192
...settlement exceeds the primary policy's limits of liability." See Roberts v. Northland Ins. Co. , 185 Ill. 2d 262, 276–77, 235 Ill. Dec. 579, 705 N.E.2d 762 (1998) (Freeman, C.J., concurring in part and dissenting in part) (cited with approval in Kajima Const. Servs. , 227 Ill. 2d at 114, 3......
-
Bogenberger v. Pi Kappa Alpha Corp.
...to address the issue in this case where the parties have not raised or argued it"); accord Roberts v. Northland Insurance Co. , 185 Ill. 2d 262, 270, 235 Ill.Dec. 579, 705 N.E.2d 762 (1998).¶ 73 As the majority recognizes, the parties here focused on only the four traditional duty factors a......
-
People v. Floyd F. (In re N.G.)
...appropriate to address issues in a case where the parties have not raised or argued it); accord Roberts v. Northland Insurance Co. , 185 Ill. 2d 262, 270, 235 Ill.Dec. 579, 705 N.E.2d 762 (1998).¶ 119 The doctrine of judicial restraint is especially compelling here where the appellate court......
-
Zimmerman v. Illinois Farmers Ins. Co.
...same position as she or he would have occupied if the tortfeasor had carried adequate insurance. Roberts v. Northland Insurance Co., 185 Ill.2d 262, 268, 235 Ill.Dec. 579, 705 N.E.2d 762 (1998), citing Cummins v. Country Mutual Insurance Co., 178 Ill.2d 474, 483, 227 Ill.Dec. 539, 687 N.E.2......