Allstate Property & Casualty Insurance Company v. Trujillo
2014 IL App (1st) 123419
Ill. App. Ct.2014Background
- On August 10, 2009, Dolores Trujillo was a passenger in a vehicle insured by Allstate (driver Delgado) and was injured in a collision with an underinsured driver (American Access insured) whose insurer paid $20,000.
- Trujillo settled Delgado’s liability policy (Allstate) for its $100,000 BI limit and sought $80,000 in underinsured motorist (UDIM) benefits from Allstate (policy UDIM limit $100,000).
- Allstate refused UDIM payment, asserting the policy endorsement reduced UDIM limits by amounts Allstate paid under the policy’s bodily injury (BI) liability coverage (i.e., the $100,000 already paid to Trujillo).
- Allstate sued for declaratory relief; the circuit court granted judgment on the pleadings for Allstate, concluding the endorsement and setoff were enforceable and not against public policy.
- On appeal the court considered whether Allstate may offset UDIM by amounts paid under its own BI liability coverage in a multi-tortfeasor case, and whether doing so would violate the public policy underlying UDIM statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Allstate may reduce UDIM limits by amounts it paid under its own BI liability coverage | Allstate: endorsement unambiguously allows setoff by any payments under the same policy, so UDIM reduced to zero | Trujillo: setoff here violates public policy when multiple tortfeasors exist because it can nullify UDIM protection and produce no coverage for harms caused by the underinsured driver | Court: Reversed — Allstate may only set off amounts recovered from the underinsured tortfeasor; Allstate cannot offset its own BI payments beyond preventing double recovery; remanded to determine damages to avoid windfall |
Key Cases Cited
- Hoglund v. State Farm Mut. Auto. Ins. Co., 148 Ill. 2d 272 (1992) (policy setoffs that nullify UM protection are latently ambiguous; setoffs limited to prevent double recovery)
- Gibbs v. Madison Mut. Ins. Co., 242 Ill. App. 3d 147 (1993) (applies Hoglund to UDIM where multiple tortfeasors exist; insurer entitled to setoff only for amounts paid by underinsured driver)
- King v. Allstate Ins. Co., 269 Ill. App. 3d 190 (1994) (in multi-tortfeasor context UDIM setoff limited to amounts from other tortfeasors; remand may be required to avoid double recovery)
- Zdeb v. Allstate Ins. Co., 404 Ill. App. 3d 113 (2010) (distinguishes single-tortfeasor cases: insurer may reduce UDIM by amounts paid under medical payments in same policy)
- Mercury Indem. Co. of Ill. v. Kim, 358 Ill. App. 3d 1 (2005) (upholds insured-vehicle exclusion in a single-insurer, single-tortfeasor-collision context)
- Pahn v. State Farm Mut. Auto. Ins. Co., 291 Ill. App. 3d 343 (1997) (upholds unambiguous anti-stacking between UM and UDIM where statutory allowance exists)