Country Preferred Insurance v. Whitehead
955 N.E.2d 689
Ill. App. Ct.2011Background
- Accident in Wisconsin (July 27, 2007) between defendant Terri Whitehead and an uninsured motorist; plaintiff Country Preferred Insurance issued a policy requiring arbitration for uninsured motorist disputes and imposing a two-year limitation to sue/arbitrate.
- Policy provision: any suit, action, or arbitration must be commenced within two years of the accident; arbitration was designated as the method for uninsured motorist claims.
- Defendant notified insurer of the accident and later, through counsel, demanded arbitration in October 2009.
- Plaintiff filed a declaratory judgment action in October 2009 asserting the two-year limit barred the uninsured motorist claim.
- Trial court denied defendant’s motion to compel arbitration; Court of Appeals reversed and remanded for further proceedings.
- Public policy analysis centered on whether Illinois law requires allowing a longer period (three years in Wisconsin) when the tortfeasor is uninsured; majority held two-year limit violates public policy; dissent disagreed on using Wisconsin law to define Illinois public policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the two-year arbitration limit violate Illinois public policy when the accident occurred in Wisconsin? | Country Preferred argues the policy time bar is enforceable; no Illinois public policy conflict. | Whitehead argues the three-year Wisconsin limit should govern; two-year limit is a dilution of rights. | Yes; the two-year limit violates Illinois public policy and is unenforceable. |
| Should Illinois public policy be determined by Illinois law rather than applying Wisconsin law for a foreign-accident scenario? | Illinois public policy should be applied domestically, not by importing Wisconsin law. | Illinois courts should analyze public policy in light of Wisconsin law due to the accident in Wisconsin. | Illinois law governs public policy analysis; Wisconsin law cannot override Illinois policy in this context. |
Key Cases Cited
- Burgo v. Illinois Farmers Insurance Co., 8 Ill. App. 3d 259 (1972) (two-year policy limit shortens statutory period, violates public policy)
- Severs v. Country Mutual Insurance Co., 89 Ill. 2d 515 (1982) (minor's two-year limit unenforceable; must align with statute for timely suit)
- Pasalka v. American Service Insurance Co., 363 Ill. App. 3d 385 (2006) (policy cannot place insured in different position from insured tortfeasor)
- Hannigan v. Country Mutual Insurance Co., 264 Ill. App. 3d 336 (1994) (two-year policy limitation upheld when aligned with Illinois statute of limitations)
- Shelton v. Country Mutual Insurance Co., 161 Ill. App. 3d 652 (1987) (two-year limitation upheld when same as Illinois limitations period)
- Hoglund v. State Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272 (1992) (public policy aim to place injured party in similar position to insured tortfeasor)