In Desaga v. West Bend Mutual Insurance Company, No. 3-08-0645, 2009 Ill. App. LEXIS 421 (3rd Dist. June 15, 2009) decedent’s widow and administrator of his estate (“plaintiff”) sought underinsured motorist (“UIM”) benefits after her husband Felix Desaga (“decedent”) had been killed in the roadway while outside of his company truck. The insurance company denied UIM benefits and plaintiff sought a declaratory judgment that decedent was entitled to UIM benefits. The only issue at trial was whether decedent was “occupying” the truck at the time of injury. The trial court granted summary judgment for the defendant finding decedent did not “occupy” the truck at the time of accident. The appellate court reversed and entered summary judgment in favor of plaintiff deciding that the decedent was entitled to UIM coverage, despite the narrow definition of “insured” in the UIM provision.
On October 6, 2006, decedent was driving his company’s truck eastbound on Wilmington-Peotone Road in Will County, Illinois. As decedent turned left onto Old Chicago Road, a few pieces of angle iron fell off his truck and onto the roadway creating an obstruction in the northeast corner of the intersection. The decedent pulled his truck over on the shoulder closest to the fallen pieces of iron, activated his hazard lights and exited the truck to retrieve the pieces of iron. Another man stopped to help the decedent clear a couple pieces of iron. As both men went back into the intersection to clear another piece, an underinsured motorist drove west-bound through the intersection, killing the decedent and injuring the other man.
In effect at the time of the accident, the decedent’s employer had a business automobile insurance policy issued by West Bend Mutual Insurance Company that covered the truck driven by the decedent. The policy had both a liability-coverage section and a UIM section, but the UIM section defined “insured” more narrowly than the liability-coverage section. The liability-coverage section defined “insured” to include:
The UIM section more narrowly defined “insured” as anyone “occupying” a covered vehicle and anyone with regard to damages he was entitled to recover because of bodily injury sustained by another “insured,” while further defining “occupying” as “in, upon, getting in, on, out or off.”
In arriving at its decision in favor of UIM coverage, the appellate court analyzed both the policy reasons behind Illinois’ mandatory insurance statutes and the broad definition of the term “occupying” as interpreted in Illinois case law. The Illinois mandatory insurance statutes require that all vehicles operated or registered in Illinois must be covered by an insurance policy with minimum liability limits of $20,000/$40,000 for bodily injury or death. 625 ILCS 5/7-601(a), 7-203 (West 2009). Furthermore, insurers are required to provide UM coverage in all policies in amounts equal to the minimum liability limits. 215 ILCS 5/143(a). If the policy provides for UM coverage in excess of the minimum liability limits, the policy must provide for UIM coverage equal to the UM coverage — UM and UIM coverage amounts must always be equal. 215 ILCS 5/143(a)-(2)(4). The purpose of UM and UIM coverage is to place the insured in the same position that the insured would have been had the tortfeasor carried adequate insurance.
Although parties have the freedom to draft their own insurance contracts, an insurance policy provision that conflicts with the law will be deemed void. Progressive Universal insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill.2d 121, 129 (2005). Likewise, parties can define who will be “insured” in any manner they desire. Heritage Insurance Co. of America v. Phelan, 59 Ill.2d 389, 391-99 (1974). However, once the parties designate who will be an “insured,” the insurance company is prohibited by law from more narrowly defining the term “insured” denying UM coverage to an insured. Id.at 395. Furthermore, the insurance company cannot define the term “insured” differently for UM coverage versus UIM coverage. Schultz v. Illinois Farmers Insurance Co., 387 Ill. App. 3d 622, 627 (2009).
Regardless of all the policy justifications for UIM coverage, the appellate court added that it would have still found decedent was entitled to UIM coverage because he was “occupying” the vehicle. Under Illinois law, two requirements must be met to impose liability on the insurer: (1) there must be a relationship between the injured party and the vehicle; and (2) there must be actual or virtual physical contact between the insured and the vehicle. Abrell v. Employers Insurance of Wausau, 343 Ill. App. 3d 260, 262 (2003).
The decedent obviously had a relationship with the truck which satisfied the first requirement. However, the appellate court still had to consider the second requirement regarding “virtual physical contact.” Upon review of the record, the appellate court found it was clear that the decedent had virtual physical contact with the truck. The decedent:
Therefore, the decedent was “occupying” the truck at the time of the accident based upon Illinois case law which rendered him an “insured” under the UIM provision.
