Why Accident Victims May Be Entitled to More Money Than Insurers Let On
When you’re in a car accident, injured badly, and have a lot of medical bills, the biggest question you have is whether the other driver has enough insurance to cover everything. Maybe you, or even your attorney, asks the insurance company what the policy limits are – and they respond. They might tell you that liability coverage of $100,000 per person, $300,000 per accident is available as the policy limits. Is it true?
In a recent Illinois case, the answer is NO. In Kim v. State Farm Mutual Automobile Insurance Co., 2021 IL App (1st) 200135, issued June 30th of 2021, State Farm said their policy limits for liability coverage were just as above: $100,000 per person, $300,000 per accident. Only after the injured Plaintiff’s attorney threatened sanctions did State Farm eventually disclose an additional one million dollars of umbrella coverage.
Umbrella coverage is often also called “excess” insurance, which is available only in major cases once the liability policy is exhausted. Umbrella or excess coverage is literally a unique type of coverage; it is not identified as “liability coverage,” but rather is a separate and distinct policy. The Appellate Court in Kim v. State Farm ruled that an insurance company is required to disclose liability coverage limits, in response to a proper demand by a claimant, based on Section 143.24b of the Illinois Insurance Code. However, insurance companies in Illinois are NOT required to disclose additional coverage in an umbrella or excess policy based on the law. *They must disclose only the primary layer policy.
- *See also Mei Pang v. Farmers Insurance Group, 2014 IL App (1st) 123204, ¶ 11 (noting that “In Illinois, umbrella policies and primary auto policies are distinct policies”)
Perhaps you might think this is a rare situation that doesn’t happen often. On the contrary, we are working on a case in which a major insurance company initially tried to act like no coverage was available for an accident with many wrongful deaths and claims for injuries. Only after pushing multiple times for specific disclosure of an umbrella policy did the company reveal (exactly like in the Kim case) that an additional one million dollars of umbrella coverage exists. Yes, it does happen.
Why do insurance companies do this? Every day, they deal with policy limits demands and requests for information on claims. They realize that many claimants either cannot afford attorneys, or other claimants simply believe attorneys do not make a difference compared to handling the claim themselves, without legal help. You don’t know what you don’t know… which includes knowing whether, and how, to ask for disclosure of umbrella and excess policies, specifically. By withholding this information from self-represented claimants, insurance companies settle claims for much, much less than their true value. And they do so lawfully.
Ask yourself: would you try to take out your own appendix?
Presumably not. When the insurance company fails or refuses to disclose the information, or if it’s only partially disclosed (such as the liability limits, only), the company forces you to negotiate in the dark, without knowing what is potentially available – settling for much, much less because you simply don’t know it’s even possible to get more under a different policy. When dealing with major claims for bad injuries, or worse, you cannot do it yourself any more than you can take out your appendix. Good lawyers have the expertise and credibility with insurance companies to know how to ask for all policies, including umbrella policies and excess coverage.