The Supreme Court of Illinois has ruled that despite the fact that there was a named driver exclusion on an insured's personal auto policy, she was not barred from recovering underinsured motorists benefits for injuries she suffered while riding as a passenger in a vehicle owned and driven by the individual listed in the exclusion. The case is Thounsavath v. State Farm Mut. Auto. Ins. Co., 2018 IL 122558.

The plaintiff in this case was Phoungeun Thounsavath. Thounsavath sought coverage from State Farm through the underinsured motorists portion of her auto insurance policy after she was injured while riding as a passenger in a vehicle owned and driven by Clinton Evans, who also happened to be a named excluded driver on her policy. Evans had insurance through American Access Insurance Company, who paid out the $20,000 limit to Thounsavath, an amount too small to cover her injuries. She then filed an underinsured motorists claim with State Farm, who denied her claim based on the “named driver” exclusion in her policy that specifically precluded coverage for injuries sustained in any vehicle operated by Evans.

Thounsavath took State Farm to court seeking a declaration that she was entitled to underinsured motorists coverage under her State Farm policy despite the exclusion precluding coverage. She argued that since there was a requirement in the Illinois Insurance Code that all auto insurance policies must provide underinsured motorists coverage to the named insured, State Farms denial of her claim was a direct violation of the law.

The trial court granted summary judgment in favor of Thounsavath, and the appellate court agreed. The Illinois Supreme Court affirmed. The court mentioned that generally, named driver exclusions are permitted in Illinois, and that under general circumstances State Farm would be entitled to identify Evans as a person for whom insurance coverage would not be provided. In this case, though, Evans was not the one seeking coverage under Thounsavath's policies, and instead Thounsavath was trying to collect under her own State Farm policies. The court pointed out that as soon as State Farm designated Thounsavath as an insured under her policies, the company was prohibited from directly or indirectly denying her underinsured motorists coverage. State Farm lost that freedom because the Insurance Code was unambiguous in their mandate that “each policy must contain the specified uninsured coverage.” The court reasoned that the named driver exclusion violated the IL mandatory insurance requirements and public policy where the exclusion barred coverage for the named insured.

State Farm argued that Thounsavath should not be covered for these injuries because she had control over whether or not she rode as a passenger in Evans' vehicle. The court concluded that the applicable statute did not require an insured “to determine a driver's limits of liability coverage before riding in his vehicle in order to recover underinsurance benefits.”

Editor's Note:

As an insured, it is very important to know for sure you are covered in all situations where you are harmed due to a motor vehicle accident at no fault of your own. The Illinois Supreme Court took this ideal seriously when deciding in favor of Thounsavath in this case. As stated in Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co. 215 Ill. 2d 121, 129, 828 N.E. 2d 1175, 293 Ill. Dec. 677 (2005), the main purpose of the mandatory liability insurance requirement is “to protect the public by securing payment of their damages.”

Basically, the reason the Insurance Code requires auto liability insurance policies to include uninsured motorists coverage is in case the insureds injuries exceed the amounts provided by the other party's insurance, the uninsured motorist provisions provide coverage amounts to ensure that there is coverage for their insured if they are injured in an accident.