94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB1873

 

Introduced 2/25/2005, by Sen. James F. Clayborne, Jr.

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/143a-2   from Ch. 73, par. 755a-2

    Amends the Illinois Insurance Code. Requires underinsured motorist coverage contracts to allow for arbitration claim deadlines at least 2 years after damages are determined and up to 10 years after the accident takes place.


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A BILL FOR

 

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1     AN ACT concerning insurance.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Insurance Code is amended by
5 changing Section 143a-2 as follows:
 
6     (215 ILCS 5/143a-2)  (from Ch. 73, par. 755a-2)
7     Sec. 143a-2. (1) Additional uninsured motor vehicle
8 coverage. No policy insuring against loss resulting from
9 liability imposed by law for bodily injury or death suffered by
10 any person arising out of the ownership, maintenance or use of
11 a motor vehicle shall be renewed or delivered or issued for
12 delivery in this State with respect to any motor vehicle
13 designed for use on public highways and required to be
14 registered in this State unless uninsured motorist coverage as
15 required in Section 143a of this Code is included in an amount
16 equal to the insured's bodily injury liability limits unless
17 specifically rejected by the insured as provided in paragraph
18 (2) of this Section. Each insurance company providing the
19 coverage must provide applicants with a brief description of
20 the coverage and advise them of their right to reject the
21 coverage in excess of the limits set forth in Section 7-203 of
22 The Illinois Vehicle Code. The provisions of this amendatory
23 Act of 1990 apply to policies of insurance applied for after
24 June 30, 1991.
25     (2) Right of rejection of additional uninsured motorist
26 coverage. Any named insured or applicant may reject additional
27 uninsured motorist coverage in excess of the limits set forth
28 in Section 7-203 of the Illinois Vehicle Code by making a
29 written request for limits of uninsured motorist coverage which
30 are less than bodily injury liability limits or a written
31 rejection of limits in excess of those required by law. This
32 election or rejection shall be binding on all persons insured

 

 

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1 under the policy. In those cases where the insured has elected
2 to purchase limits of uninsured motorist coverage which are
3 less than bodily injury liability limits or to reject limits in
4 excess of those required by law, the insurer need not provide
5 in any renewal, reinstatement, reissuance, substitute,
6 amended, replacement or supplementary policy, coverage in
7 excess of that elected by the insured in connection with a
8 policy previously issued to such insured by the same insurer
9 unless the insured subsequently makes a written request for
10 such coverage.
11     (3) The original document indicating the applicant's
12 selection of uninsured motorist coverage limits shall
13 constitute sufficient evidence of the applicant's selection of
14 uninsured motorist coverage limits. For purposes of this
15 Section any reproduction of the document by means of
16 photograph, photostat, microfiche, computerized optical
17 imaging process, or other similar process or means of
18 reproduction shall be deemed the equivalent of the original
19 document.
20     (4) For the purpose of this Code the term "underinsured
21 motor vehicle" means a motor vehicle whose ownership,
22 maintenance or use has resulted in bodily injury or death of
23 the insured, as defined in the policy, and for which the sum of
24 the limits of liability under all bodily injury liability
25 insurance policies or under bonds or other security required to
26 be maintained under Illinois law applicable to the driver or to
27 the person or organization legally responsible for such vehicle
28 and applicable to the vehicle, is less than the limits for
29 underinsured coverage provided the insured as defined in the
30 policy at the time of the accident. The limits of liability for
31 an insurer providing underinsured motorist coverage shall be
32 the limits of such coverage, less those amounts actually
33 recovered under the applicable bodily injury insurance
34 policies, bonds or other security maintained on the
35 underinsured motor vehicle.
36      On or after July 1, 1983, no policy insuring against loss

 

 

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1 resulting from liability imposed by law for bodily injury or
2 death suffered by any person arising out of the ownership,
3 maintenance or use of a motor vehicle shall be renewed or
4 delivered or issued for delivery in this State with respect to
5 any motor vehicle designed for use on public highways and
6 required to be registered in this State unless underinsured
7 motorist coverage is included in such policy in an amount equal
8 to the total amount of uninsured motorist coverage provided in
9 that policy where such uninsured motorist coverage exceeds the
10 limits set forth in Section 7-203 of the Illinois Vehicle Code.
11     The changes made to this subsection (4) by this amendatory
12 Act of the 93rd General Assembly apply to policies issued or
13 renewed on or after December 1, 2004.
14     (5) Scope. Nothing herein shall prohibit an insurer from
15 setting forth policy terms and conditions which provide that if
16 the insured has coverage available under this Section under
17 more than one policy or provision of coverage, any recovery or
18 benefits may be equal to, but may not exceed, the higher of the
19 applicable limits of the respective coverage, and the limits of
20 liability under this Section shall not be increased because of
21 multiple motor vehicles covered under the same policy of
22 insurance. Insurers providing liability coverage on an excess
23 or umbrella basis are neither required to provide, nor are they
24 prohibited from offering or making available coverages
25 conforming to this Section on a supplemental basis.
26 Notwithstanding the provisions of this Section, an insurer
27 shall not be prohibited from solely providing a combination of
28 uninsured and underinsured motorist coverages where the limits
29 of liability under each coverage is in the same amount.
30     (6) Subrogation against underinsured motorists. No insurer
31 shall exercise any right of subrogation under a policy
32 providing additional uninsured motorist coverage against an
33 underinsured motorist where the insurer has been provided with
34 written notice in advance of a settlement between its insured
35 and the underinsured motorist and the insurer fails to advance
36 a payment to the insured, in an amount equal to the tentative

 

 

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1 settlement, within 30 days following receipt of such notice.
2     (7) A policy which provides underinsured motor vehicle
3 coverage may include a clause which denies payment until the
4 limits of liability or portion thereof under all bodily injury
5 liability insurance policies applicable to the underinsured
6 motor vehicle and its operators have been partially or fully
7 exhausted by payment of judgment or settlement. A judgment or
8 settlement of the bodily injury claim in an amount less than
9 the limits of liability of the bodily injury coverages
10 applicable to the claim shall not preclude the claimant from
11 making an underinsured motorist claim against the underinsured
12 motorist coverage. Any such provision in a policy of insurance
13 shall be inapplicable if the insured, or the legal
14 representative of the insured, and the insurer providing
15 underinsured motor vehicle coverage agree that the insured has
16 suffered bodily injury or death as the result of the negligent
17 operation, maintenance, or use of an underinsured motor vehicle
18 and, without arbitration, agree also on the amount of damages
19 that the insured is legally entitled to collect. The maximum
20 amount payable pursuant to such an underinsured motor vehicle
21 insurance settlement agreement shall not exceed the amount by
22 which the limits of the underinsured motorist coverage exceed
23 the limits of the bodily injury liability insurance of the
24 owner or operator of the underinsured motor vehicle. Any such
25 agreement shall be final as to the amount due and shall be
26 binding upon both the insured and the underinsured motorist
27 insurer regardless of the amount of any judgment, or any
28 settlement reached between any insured and the person or
29 persons responsible for the accident. No such settlement
30 agreement shall be concluded unless: (i) the insured has
31 complied with all other applicable policy terms and conditions;
32 and (ii) before the conclusion of the settlement agreement, the
33 insured has filed suit against the underinsured motor vehicle
34 owner or operator and has not abandoned the suit, or settled
35 the suit without preserving the rights of the insurer providing
36 underinsured motor vehicle coverage in the manner described in

 

 

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1 paragraph (6) of this Section.
2     (8) No policy for underinsured motorist coverage shall be
3 renewed, delivered, or issued for delivery in this State unless
4 the contractual deadline or limitation to initiate a demand for
5 arbitration is no sooner than 2 years after the damages in the
6 underlying claim or lawsuit have been determined, whether by
7 suit, settlement, or otherwise. In no instance shall the
8 written demand for arbitration be made more than 10 years after
9 the accident for which damages are being sought took place.
10 (Source: P.A. 93-762, eff. 7-16-04.)