Thounsavath v. State Farm Mutual Automobile Insurance Co.
82 N.E.3d 523
Ill. App. Ct.2017Background
- Plaintiff Phoungeun Thounsavath was injured as a passenger in a vehicle driven by Clinton M. Evans; Evans’ insurer (AAIC) paid $20,000 for the claim.
- Plaintiff held two State Farm automobile liability policies that included underinsured motorist (UIM) coverage.
- Both State Farm policies contained a named-driver exclusion barring coverage while any motor vehicle was operated by "CLINTON M. EVANS."
- State Farm denied the plaintiff’s UIM claim based on that exclusion.
- Circuit court denied State Farm’s summary-judgment motion and granted the plaintiff’s; State Farm appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a named-driver exclusion that bars coverage for the named insured violates Illinois mandatory-insurance statutes and public policy | Named-driver exclusion cannot be enforced against the named insured; doing so would defeat statutory UIM/uninsured protections and prior Supreme Court precedent (Barnes line) | Named-driver exclusions are permitted and enforceable; statutes allowing exclusions (post-enactment of 7-602) and precedent (Phelan, Smith) support enforcement | Court held the exclusion is unenforceable as to the named insured; it violates the Financial Responsibility Law and Illinois public policy (following Reyes and Barnes line) |
Key Cases Cited
- Phoenix Insurance Co. v. Rosen, 242 Ill. 2d 48 (court explains mandatory-insurance purpose to protect public by securing payment of damages)
- Barnes v. Powell, 49 Ill. 2d 449 (interprets §143a to require uninsured/UIM protection for insureds regardless of vehicle declared)
- American Access Casualty Co. v. Reyes, 2013 IL 115601 (held sole named insured may not be excluded from liability coverage under §7-317(b)(2))
- Heritage Ins. Co. of Am. v. Phelan, 59 Ill. 2d 389 (upheld a restrictive endorsement in prior context)
- Rockford Mutual Ins. Co. v. Economy & Casualty Co., 217 Ill. App. 3d 181 (applied Barnes to hold that an exclusion rendering a vehicle uninsured affects recovery under other policies)