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Illinois Appellate Court finds Insurance Company responsible to pay its underinsured benefits following rental car accident.

Underinsured motorist coverage?  What is it?  Do you have it?  Do you pay for it?  Underinsured motorist coverage is rarely discussed, but, when it is, it usually means that a traumatic accident or injury has occurred.

Underinsured motorist coverage protects you if you are in an accident with a driver whose insurance policy limits are too low to cover your damages or medical expenses.  For example, if you are in an accident with someone who has Illinois minimum coverage, only $25,000, and you suffer serious physical injuries, there is a high likelihood that your medical bills will exceed his insurance.  This is when your underinsured motorist coverage kicks in to help pay for your medical treatments and your pain and suffering.

In Safeway Insurance Company v. Jeffery Hadary, Mr. and Ms. Hadary were involved in an accident with another individual driving a rental car.  That individual only had state minimum coverage, so his policy limits were not enough to cover the physical injuries to Mr. and Ms. Hadary.  The Hadarys then sought to use their underinsured motorist coverage that they purchased through Safeway Insurance Company in order to pay for their injuries and medical bills.  Safeway, unfortunately, refused to cover the accident claiming that the Hadarys must first try and seek coverage from the rental car company before their underinsured motorist coverage would kick in.

Specifically, Safeway pointed to a provision in the insurance agreement that read “Safeway shall not be obligated to pay under this [underinsured motorist coverage] until after the limits of liability under all applicable bodily injury bonds or policies … have been exhausted.”  Safeway argued that their insureds, the Hadarys, need to recoup from the rental car company before they are entitled to any payments from their underinsured motorist coverage.  The Illinois Appellate Court disagreed finding that the Hadarys “paid a $57-premium per month premium for and what they bargained for from their insurance policy,” and that part of that bargain was for underinsured motorist coverage and, thus, to require the Hadarys to exhaust all other potential sources of recovery prevented them from receiving the benefit of that bargain.  The Court argued that this ruling would assure that consumers, not insurance companies, were protected in order to give full force and effect to Illinois law.

If you or someone you know have been involved in an automobile accident, contact one of the experienced attorneys at Hipskind & McAninch, LLC, for a FREE case consultation in order to assure you defend your financial rights against the insurance companies: 618.641.9189 | 314.312.2930 |

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