Their Own Insurance Company Sued Them Instead of Paying Their Claim

When an Illinois insurance company refuses to pay a valid uninsured motorist claim, the policyholder can fight back under 215 ILCS 5/155, which penalizes vexatious and unreasonable delay. In one of our cases, the insurer went further than denial — it sued its own policyholders in a Chicago courtroom three hours from their home rather than honor a straightforward UM claim the law clearly supported.

Last Updated: March 28, 2026

A family in the Peoria area was riding together when an uninsured driver hit them. Two adults. Two children. The other driver had no insurance.

That is exactly the situation uninsured motorist coverage is designed for. You pay extra on your premium every month so that if someone without insurance hurts you, your own policy covers you. That is the deal.

The family had that coverage. They filed their claims. And then their insurance company — American Heartland Insurance Company — made it as hard as possible for them to get anything at all.

How Insurance Companies Make It Hard: Step by Step

What Heartland did was not random. Looking back at the timeline, every move followed a recognizable pattern. Here is what it looked like in practice.

Step 1: Create confusion about whether you’re even covered.

Two months after the accident, Heartland sent a letter saying the policy “will cancel in 30 days” because a household member had not been listed on the application. Then nothing happened. No cancellation. No refund of premiums. No follow-up call. The letter was never acted on. The company just let it sit there — leaving the family wondering whether they had coverage at all.

Step 2: Ask for paperwork, then ask for more paperwork.

Two months later, Heartland reversed course. It said it would “consider coverage” and asked the family to fill out witness statement forms. They did. Then Heartland asked for medical records and bills. They sent them. Then Heartland told the family they had to file a separate lawsuit against the uninsured driver — at the family’s own expense — to protect the insurance company’s legal right to recover money from the driver later. The family did that too, filing suit in Tazewell County.

Step 3: Go silent for a year.

From July 2015 to July 2016 — an entire year — Heartland said nothing. No updates. No communication. The company still collecting this family’s monthly premiums simply disappeared.

Step 4: Come back with a take-it-or-leave-it lowball.

When Heartland finally resurfaced, it asked for more documentation. We submitted a full demand and settlement package on the family’s behalf. One week later, the adjuster called with the company’s offer: $15,000 total — for two adults and two children injured in a crash — or the company would deny coverage entirely.

That is not a negotiation. That is a threat.

We pointed out that Illinois law — specifically 215 ILCS 5/143.1 — had paused the claims deadline while Heartland sat on the case, and that the company had no legal basis for its position. The adjuster said he would “check with legal.” No one ever called back.

Then Heartland Did Something Unusual: It Sued Its Own Policyholders

Instead of paying, Heartland filed a lawsuit against the family. But this was not a normal denial. This was something called a declaratory judgment action.

Here is what that means in plain English: Heartland went to court and asked a judge to officially declare that the family had no right to any coverage — that the policy never really applied to them in the first place. Instead of the family suing the insurance company, the insurance company sued the family. It flipped the whole thing around.

And they did not file it in Tazewell County, where the accident happened. They did not file it in Peoria, where the family lived. They filed it in Cook County — in Chicago. That is a three-hour drive each way from Peoria.

Every hearing we attended required a six-hour round trip. Every filing, every status date, every court appearance. That is not a coincidence. Filing in a distant courthouse is a pressure tactic. It makes fighting back more expensive in time and money. The bet is that at some point, the policyholder gives up — and accepts whatever crumbs the company is offering, or walks away with nothing.

We did not give up.

Heartland’s Two Arguments — Which Couldn’t Both Be True

Heartland’s lawsuit made two claims. The problem is that they directly contradicted each other.

Argument One: The policy never existed. Heartland claimed the family had made a misrepresentation on the application — a household member was not disclosed — so the policy was void from day one. As in, it was never a real policy to begin with.

Argument Two: The family missed a deadline in the policy. Heartland claimed the family had not demanded arbitration within two years, as required by the policy’s terms.

Here is the logical problem with arguing both at once: you cannot miss a deadline in a policy that does not exist. If the policy was void from the start — never real — then there is no arbitration clause. There is no deadline. There is no policy to violate. But if there is an arbitration deadline the family could have violated, then the policy was real, and a real policy means the claim should be covered.

Heartland was trying to have it both ways. Illinois law did not allow that.

Why Illinois Law Shut Both Arguments Down

On the “policy never existed” argument:

Illinois has a law — 215 ILCS 5/154 — that says once an auto insurance policy has been in effect for one full policy term, the insurance company cannot go back and cancel it by claiming someone lied on the application. The window closes. The family’s policy started in January 2014 and was renewed in July 2014. By the time Heartland raised the fraud argument months after that, the window had already closed. Heartland’s own policy said the same thing in its own documents.

On the “missed deadline” argument:

Both Illinois law and Heartland’s own policy said that the two-year deadline is paused from the moment a policyholder files a proof of loss — until the company formally denies the claim. The family filed their proof of loss in 2015. Heartland never issued a formal denial after that. Not until it filed the lawsuit. The clock had been legally paused the entire time. There was no missed deadline.

The Court Asked for a Real Argument. The Company Had Nothing.

We filed a motion for summary judgment. That is a request for the judge to rule without holding a full trial. A judge can do this when the facts and the law are so clearly on one side that there is nothing left to argue about. We laid out every legal problem with Heartland’s case in writing and asked the court to rule in the family’s favor.

The court ordered Heartland to explain, in full, its legal basis for denying the claim.

What came back was nearly identical to the brief the company had already filed — the same arguments, one new paragraph, some added bold text. Given a second chance to make a real legal argument, Heartland had nothing new to say.

The court granted summary judgment for the family. Heartland’s case was dismissed.

Why Insurers Use This Playbook

What Heartland did was not random or unique. It follows a strategy that becomes clear when you understand how insurance companies decide what a claim is “worth.”

Many large insurers use computer software to put a dollar value on injury claims. One of the most common programs is called Colossus. Only insurance adjusters have access to it — you do not get to see it or challenge its inputs.

Here is how it works: The adjuster enters information about your injury — the type, the treatment, the severity of the car damage. The software spits out a settlement range based on what juries have awarded in similar cases in the area. That number becomes the company’s ceiling. Some companies will not let their adjusters offer more than what the software says, no matter what the actual circumstances are.

The program has a built-in bias. It counts things the company can see on a scan or an X-ray. It discounts things that are harder to measure — your pain, your anxiety, how the injury changed your daily life. “Garbage in, garbage out,” as one legal treatise on insurance claims puts it. A biased input produces a biased result.

There is also institutional pressure. Colossus is used to evaluate adjuster performance — their annual reviews, their raises, their promotions. An adjuster who consistently settles above what the software says faces career consequences. The lowball is not just one bad adjuster’s decision. It is built into the system.

Now stack the obstacles on top of that already-low starting number. A year of silence. A pile of paperwork. A hearing in a courthouse six hours away. Legal arguments that contradict each other. Each obstacle costs you time and money. The company’s calculation is simple: at some point, fighting back costs you more than the claim is worth. So you take whatever they offer, or you walk away.

That is the playbook. The low software number is the starting point. The obstacles are the enforcement mechanism. We explain the full range of tactics insurers use — and the legal tools available to fight back — in our complete guide to uninsured and underinsured motorist claims in Illinois. And when an insurer has a documented history of fighting its own policyholders’ UM claims, the pattern is harder to dismiss as a one-off misunderstanding.

The State’s Own Data Confirms This Is Not Isolated

Every year, the Illinois Department of Insurance publishes a Consumer Complaints Ratio Report. It measures complaints per dollar of earned premium, so you can compare companies of different sizes on a level playing field.

In the most recent report, American Heartland Insurance Company posted a complaint ratio of 3.31. The industry average is 0.29. Heartland’s ratio is more than eleven times higher than the average. Of its 69 total complaints, 65 — nearly 94 percent — were about claims handling.

That is not a coincidence. That is a pattern. What this family experienced, other policyholders have experienced too.

You can look up any insurer’s complaint history at insurance.illinois.gov. We break down the full IDOI report — including which companies rank best and worst — in our companion post on what the complaint ratio data shows about Illinois auto insurers.

What Illinois Law Says You Can Do About It

Illinois does not leave policyholders defenseless. Section 155 of the Illinois Insurance Code says that when an insurance company’s delay or denial is vexatious and unreasonable — meaning there was no good reason for it — the policyholder can recover attorney’s fees, court costs, and an additional penalty on top of the original claim.

The law exists for exactly this kind of situation: where the insurer has no legitimate dispute, but manufactures one anyway to avoid paying.

Whether conduct crosses that line depends on whether the company had a real, good-faith reason for its position. Going silent for a year. Threatening cancellation and then doing nothing. Suing your own policyholders in a courthouse three hours away. Arguing two legal theories that contradict each other. That is not a good-faith dispute. That is a strategy.

If an insurance company is refusing to fairly handle your uninsured or underinsured motorist claim, an attorney can evaluate whether what you are experiencing is a legitimate coverage question or something that crosses into bad faith denial. There is a difference, and that difference has legal consequences for the company.

Frequently Asked Questions

What does it mean when your insurance company files a declaratory judgment against you?

It means the company went to court and asked a judge to officially rule that you have no right to coverage. Instead of simply denying your claim, the insurer sued you first — trying to get a court order saying the policy does not apply. Some companies file these cases in distant courthouses to make it harder and more expensive for you to fight back.

Can my insurance company cancel my auto policy after an accident in Illinois?

Not after the policy has been in effect for a full policy term. Under 215 ILCS 5/154, an insurer cannot go back and void an auto policy for an alleged misrepresentation once that window has closed. If the policy has already been renewed even once, it is generally too late for the company to claim fraud on the original application.

Can my own insurance company deny my uninsured motorist claim?

An insurer can raise genuine coverage questions, but it cannot manufacture obstacles, go silent for a year, or take contradictory legal positions just to avoid paying. Illinois law under Section 155 provides penalties — including attorney’s fees and additional damages — when a company’s delay or denial is vexatious and unreasonable.

How do I check my insurance company’s complaint record in Illinois?

The Illinois Department of Insurance publishes a free Consumer Complaints Ratio Report every year. You can search any company’s record at insurance.illinois.gov. A higher ratio means more complaints relative to the company’s size — and most complaints are about claims handling.

What is Section 155 of the Illinois Insurance Code?

Section 155 is an Illinois law that penalizes insurance companies for vexatious and unreasonable delay or denial of claims. If a court finds that an insurer had no good-faith reason for its position, it can award the policyholder attorney’s fees, litigation costs, and an additional penalty on top of whatever the claim was worth.

Being hit by an uninsured or underinsured driver is already stressful enough without your own insurer turning against you. Our experienced Peoria personal injury lawyers know how to handle these claims and hold insurers accountable.

Related Articles

• Local Car Crash Attorneys
• The Complete Guide to Uninsured & Underinsured Motorist Claims in Illinois
• When Your Own Insurance Company Fights Your UM/UIM Claim in Illinois
• Bad Faith Denial of UM/UIM Claims in Illinois