SB2773 94TH GENERAL ASSEMBLY

LRB094 14550 LJB 49490 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2773

Introduced 1/20/2006, by Sen. William E. Peterson

SYNOPSIS AS INTRODUCED:

215 ILCS 5/143a	from Ch. 73, par. 755a
215 ILCS 5/143a-2	from Ch. 73, par. 755a-2

Amends the Illinois Insurance Code. Provides that automobile insurers do not have to make available uninsured or underinsured motorist coverage in connection with the issuance of certain commercial liability policies. Effective immediately.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by changing Sections 143a and 143a-2 as follows:

(215 ILCS 5/143a) (from Ch. 73, par. 755a)

Sec. 143a. Uninsured and hit and run motor vehicle coverage.

(1) Except as provided in subsection (2.5) of this Section, no No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State shall be renewed, delivered, or issued for delivery in this State unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Section 7-203 of the Illinois Vehicle Code for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. Uninsured motor vehicle coverage does not apply to bodily injury, sickness, disease, or death resulting therefrom, of an insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the insured, a resident spouse or resident relative, if that motor vehicle is not described in the policy under which a claim is made or is not a newly acquired or replacement motor vehicle covered under the terms of the policy. The limits for any coverage for any vehicle under the policy may not be aggregated with the limits for any similar coverage, whether provided by the same insurer or another insurer, applying to other motor vehicles, for purposes of determining the total limit of insurance coverage available for bodily injury or death suffered by a person in any one accident. No policy shall be renewed, delivered, or issued for delivery in this State unless it is provided therein that any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings as to all matters except medical opinions. As to medical opinions, if the amount of damages being sought is equal to or less than the amount provided for in Section 7-203 of the Illinois Vehicle Code, then the current American Arbitration Association Rules shall apply. If the amount being sought in an American Arbitration Association case exceeds that amount as set forth in Section 7-203 of the Illinois Vehicle Code, then the Rules of Evidence that apply in the circuit court for placing medical opinions into evidence shall govern. Alternatively, disputes with respect to damages and the coverage shall be determined in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $50,000 for bodily injury to or death of any one person, $100,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less. All 3-person arbitration cases proceeding in accordance with any uninsured motorist coverage conducted in this State in which the claimant is only seeking monetary damages up to the limits set forth in Section 7-203 of the Illinois Vehicle Code shall be subject to the following rules:

(A) If at least 60 days' written notice of the intention to offer the following documents in evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:

(1) bills, records, and reports of hospitals, doctors, dentists, registered nurses, licensed practical nurses, physical therapists, and other healthcare providers;

(2) bills for drugs, medical appliances, and prostheses;

(3) property repair bills or estimates, when identified and itemized setting forth the charges for labor and material used or proposed for use in the repair of the property;

(4) a report of the rate of earnings and time lost from work or lost compensation prepared by an employer;

(5) the written opinion of an opinion witness, the deposition of a witness, and the statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;

(6) any other document not specifically covered by any of the foregoing provisions that is otherwise admissible under the rules of evidence.

Any party receiving a notice under this paragraph (A) may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.

(B) Notwithstanding the provisions of Supreme Court Rule 213(g), a party who proposes to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.

(C) Any other party may subpoena the author or maker of a document admissible under this subsection, at that party's expense, and examine the author or maker as if under cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure shall be applicable to arbitration hearings, and it shall be the duty of a party requesting the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.

(D) The provisions of Section 2-1102 of the Code of Civil Procedure shall be applicable to arbitration hearings under this subsection.

(2) Except as provided in subsection (2.5) of this Section, no No policy insuring against loss resulting from liability imposed by law for property damage arising out of the ownership, maintenance, or use of a motor vehicle shall be renewed, delivered, or issued for delivery in this State with respect to any private passenger or recreational motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State and is not covered by collision insurance under the provisions of such policy, unless coverage is made available in the amount of the actual cash value of the motor vehicle described in the policy or $15,000 whichever is less, subject to a $250 deductible, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of property damage to the motor vehicle described in the policy.

There shall be no liability imposed under the uninsured motorist property damage coverage required by this subsection if the owner or operator of the at-fault uninsured motor vehicle or hit-and-run motor vehicle cannot be identified. This subsection shall not apply to any policy which does not provide primary motor vehicle liability insurance for liabilities arising from the maintenance, operation, or use of a specifically insured motor vehicle.

Each insurance company providing motor vehicle property damage liability insurance shall advise applicants of the availability of uninsured motor vehicle property damage coverage, the premium therefor, and provide a brief description of the coverage. Each insurer, with respect to the initial renewal, reinstatement, or reissuance of a policy of motor vehicle property damage liability insurance shall provide present policyholders with the same information in writing. That information need be given only once and shall not be required in any subsequent renewal, reinstatement or reissuance, substitute, amended, replacement or supplementary policy. No written rejection shall be required, and the absence of a premium payment for uninsured motor vehicle property damage shall constitute conclusive proof that the applicant or policyholder has elected not to accept uninsured motorist property damage coverage.

An insurance company issuing uninsured motor vehicle property damage coverage may provide that:

(i) Property damage losses recoverable thereunder shall be limited to damages caused by the actual physical contact of an uninsured motor vehicle with the insured motor vehicle.

(ii) There shall be no coverage for loss of use of the insured motor vehicle and no coverage for loss or damage to personal property located in the insured motor vehicle.

(iii) Any claim submitted shall include the name and address of the owner of the at-fault uninsured motor vehicle, or a registration number and description of the vehicle, or any other available information to establish that there is no applicable motor vehicle property damage liability insurance.

Any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings or for determination in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any arbitration proceeding under this subsection seeking recovery for property damages shall be subject to the following rules:

(A) If at least 60 days' written notice of the intention to offer the following documents in evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:

(1) property repair bills or estimates, when identified and itemized setting forth the charges for labor and material used or proposed for use in the repair of the property;

(2) the written opinion of an opinion witness, the deposition of a witness, and the statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;

(3) any other document not specifically covered by any of the foregoing provisions that is otherwise admissible under the rules of evidence.

Any party receiving a notice under this paragraph (A) may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.

(B) Notwithstanding the provisions of Supreme Court Rule 213(g), a party who proposes to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.

(C) Any other party may subpoena the author or maker of a document admissible under this subsection, at that party's expense, and examine the author or maker as if under cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure shall be applicable to arbitration hearings, and it shall be the duty of a party requesting the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.

(D) The provisions of Section 2-1102 of the Code of Civil Procedure shall be applicable to arbitration hearings under this subsection.

(2.5) Notwithstanding any other provision of this Section or Section 143a-2 of this Code, no insurer shall be required to make available uninsured or underinsured motorist coverage in connection with the issuance of any of the following:

(A) a commercial liability policy, including a commercial vehicle policy;

(B) a commercial package policy that includes commercial liability and other coverages;

(C) a commercial umbrella or excess liability policy;

(D) a commercial liability policy that provides hired or nonowned motor vehicle liability coverage; or

(E) a commercial liability policy that provides limited or incidental coverage for liability arising out of the ownership, maintenance, operation, or use of a motor vehicle, including a motor vehicle that is not subject to motor vehicle registration and not intended or designed to be used on a public roadway.

For the purposes of this subsection (2.5), "commercial vehicle policy" means an insurance policy that provides coverage for at least one of the following:

(i) A motor vehicle that is rated or insured as a business or commercial vehicle.

(ii) A motor vehicle that is licensed by the State as a commercial vehicle.

(iii) A commercial motor vehicle business, including an individual who or entity that is in the business or occupation of selling, repairing, servicing, storing, or parking motor vehicles, including a business that is a commercial garage operation, an automobile sales entity, a motor vehicle repair entity, a motor vehicle service station, or a public parking operation.

(iv) A motor vehicle that is used as a public or private livery or a rental conveyance.

(v) A motor vehicle that is owned or used by a named insured that is not a natural person.

(3) For the purpose of the coverage the term "uninsured motor vehicle" includes, subject to the terms and conditions of the coverage, a motor vehicle where on, before or after the accident date the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified in the policy because of the entry by a court of competent jurisdiction of an order of rehabilitation or liquidation by reason of insolvency on or after the accident date. An insurer's extension of coverage, as provided in this subsection, shall be applicable to all accidents occurring after July 1, 1967 during a policy period in which its insured's uninsured motor vehicle coverage is in effect. Nothing in this Section may be construed to prevent any insurer from extending coverage under terms and conditions more favorable to its insureds than is required by this Section.

(4) In the event of payment to any person under the coverage required by this Section and subject to the terms and conditions of the coverage, the insurer making the payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of the person against any person or organization legally responsible for the property damage, bodily injury or death for which the payment is made, including the proceeds recoverable from the assets of the insolvent insurer. With respect to payments made by reason of the coverage described in subsection (3), the insurer making such payment shall not be entitled to any right of recovery against the tort-feasor in excess of the proceeds recovered from the assets of the insolvent insurer of the tort-feasor.

(5) This amendatory Act of 1967 shall not be construed to terminate or reduce any insurance coverage or any right of any party under this Code in effect before July 1, 1967. This amendatory Act of 1990 shall not be construed to terminate or reduce any insurance coverage or any right of any party under this Code in effect before its effective date.

(6) Failure of the motorist from whom the claimant is legally entitled to recover damages to file the appropriate forms with the Safety Responsibility Section of the Department of Transportation within 120 days of the accident date shall create a rebuttable presumption that the motorist was uninsured at the time of the injurious occurrence.

(7) An insurance carrier may upon good cause require the insured to commence a legal action against the owner or operator of an uninsured motor vehicle before good faith negotiation with the carrier. If the action is commenced at the request of the insurance carrier, the carrier shall pay to the insured, before the action is commenced, all court costs, jury fees and sheriff's fees arising from the action.

The changes made by this amendatory Act of 1997 apply to all policies of insurance amended, delivered, issued, or renewed on and after the effective date of this amendatory Act of 1997.

(Source: P.A. 93-485, eff. 1-1-04.)

(215 ILCS 5/143a-2) (from Ch. 73, par. 755a-2)

Sec. 143a-2. (1) Additional uninsured motor vehicle coverage. Except as exempted in subsection (2.5) of Section 143a of this Code, no No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless uninsured motorist coverage as required in Section 143a of this Code is included in an amount equal to the insured's bodily injury liability limits unless specifically rejected by the insured as provided in subsection paragraph (2) of this Section. Each insurance company providing the coverage must provide applicants with a brief description of the coverage and advise them of their right to reject the coverage in excess of the limits set forth in Section 7-203 of The Illinois Vehicle Code. The provisions of this amendatory Act of 1990 apply to policies of insurance applied for after June 30, 1991.

(2) Right of rejection of additional uninsured motorist coverage. Any named insured or applicant may reject additional uninsured motorist coverage in excess of the limits set forth in Section 7-203 of the Illinois Vehicle Code by making a written request for limits of uninsured motorist coverage which are less than bodily injury liability limits or a written rejection of limits in excess of those required by law. This election or rejection shall be binding on all persons insured under the policy. In those cases where the insured has elected to purchase limits of uninsured motorist coverage which are less than bodily injury liability limits or to reject limits in excess of those required by law, the insurer need not provide in any renewal, reinstatement, reissuance, substitute, amended, replacement or supplementary policy, coverage in excess of that elected by the insured in connection with a policy previously issued to such insured by the same insurer unless the insured subsequently makes a written request for such coverage. The provisions of this subsection (2) do not apply to policies of insurance exempted under subsection (2.5) of Section 143a of this Code.

(3) The original document indicating the applicant's selection of uninsured motorist coverage limits shall constitute sufficient evidence of the applicant's selection of uninsured motorist coverage limits. For purposes of this Section any reproduction of the document by means of photograph, photostat, microfiche, computerized optical imaging process, or other similar process or means of reproduction shall be deemed the equivalent of the original document.

(4) For the purpose of this Code the term "underinsured motor vehicle" means a motor vehicle whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds or other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle.

Except as exempted in subsection (2.5) of Section 143a of this Code, on On or after July 1, 1983, no policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless underinsured motorist coverage is included in such policy in an amount equal to the total amount of uninsured motorist coverage provided in that policy where such uninsured motorist coverage exceeds the limits set forth in Section 7-203 of the Illinois Vehicle Code.

The changes made to this subsection (4) by this amendatory Act of the 93rd General Assembly apply to policies issued or renewed on or after December 1, 2004.

(5) Scope. Nothing herein shall prohibit an insurer from setting forth policy terms and conditions which provide that if the insured has coverage available under this Section under more than one policy or provision of coverage, any recovery or benefits may be equal to, but may not exceed, the higher of the applicable limits of the respective coverage, and the limits of liability under this Section shall not be increased because of multiple motor vehicles covered under the same policy of insurance. Insurers providing liability coverage on an excess or umbrella basis are neither required to provide, nor are they prohibited from offering or making available coverages conforming to this Section on a supplemental basis. Notwithstanding the provisions of this Section, an insurer shall not be prohibited from solely providing a combination of uninsured and underinsured motorist coverages where the limits of liability under each coverage is in the same amount.

(6) Subrogation against underinsured motorists. No insurer shall exercise any right of subrogation under a policy providing additional uninsured motorist coverage against an underinsured motorist where the insurer has been provided with written notice in advance of a settlement between its insured and the underinsured motorist and the insurer fails to advance a payment to the insured, in an amount equal to the tentative settlement, within 30 days following receipt of such notice.

(7) A policy which provides underinsured motor vehicle coverage may include a clause which denies payment until the limits of liability or portion thereof under all bodily injury liability insurance policies applicable to the underinsured motor vehicle and its operators have been partially or fully exhausted by payment of judgment or settlement. A judgment or settlement of the bodily injury claim in an amount less than the limits of liability of the bodily injury coverages applicable to the claim shall not preclude the claimant from making an underinsured motorist claim against the underinsured motorist coverage. Any such provision in a policy of insurance shall be inapplicable if the insured, or the legal representative of the insured, and the insurer providing underinsured motor vehicle coverage agree that the insured has suffered bodily injury or death as the result of the negligent operation, maintenance, or use of an underinsured motor vehicle and, without arbitration, agree also on the amount of damages that the insured is legally entitled to collect. The maximum amount payable pursuant to such an underinsured motor vehicle insurance settlement agreement shall not exceed the amount by which the limits of the underinsured motorist coverage exceed the limits of the bodily injury liability insurance of the owner or operator of the underinsured motor vehicle. Any such agreement shall be final as to the amount due and shall be binding upon both the insured and the underinsured motorist insurer regardless of the amount of any judgment, or any settlement reached between any insured and the person or persons responsible for the accident. No such settlement agreement shall be concluded unless: (i) the insured has complied with all other applicable policy terms and conditions; and (ii) before the conclusion of the settlement agreement, the insured has filed suit against the underinsured motor vehicle owner or operator and has not abandoned the suit, or settled the suit without preserving the rights of the insurer providing underinsured motor vehicle coverage in the manner described in paragraph (6) of this Section.

(Source: P.A. 93-762, eff. 7-16-04.)

Section 99. Effective date. This Act takes effect upon becoming law.