Can an insurance policy be rendered unenforceable by Illinois public policy because of a conflict with another state’s law?
This morning, in an opinion by Justice Lloyd A. Karmeier for a 6-1 majority, the Illinois Supreme Court held that the answer was "no."
Country Preferred Insurance Co. v. Whitehead arose from an accident in Wisconsin between the insured and an uninsured driver. That fact matters because the insured’s uninsured motorist coverage provided that the insured had two years to file an action against the insurer under the coverage – a natural enough time limit, since the statute of limitations for filing an uninsured motorist claim under Illinois law is two years. But the state of Wisconsin allows uninsured motorist claims to be filed for three years after an accident.
The insured had her accident in the summer of 2007. She contacted her insurer almost immediately, and the parties had a number of communications over the next two years. But the insured never "commenced" a "suit, action or arbitration," as required by her policy. More than two years after the accident, the insurer finally filed an action for declaratory relief, seeking a finding of no coverage. The insured counterclaimed, arguing that since the policy filing deadline was a year shorter than the Wisconsin statute of limitations, the two-year policy deadline deadline was an unenforceable attempt to defeat the intent and the purpose of the Illinois Uninsured Motorist statute, 215 ILCS 5/143a.
The insured filed a motion to compel arbitration pursuant to her policy. The Circuit Court denied the motion, noting that Illinois courts had repeatedly held that the two-year policy filing deadline did not violate public policy. On interlocutory appeal, the Appellate Court reversed, holding that Illinois public policy required that an injured party be placed in the same position he or she would have been if the driver had struck someone carrying insurance. This meant — since the insured would have had three years to file after her accident in Wisconsin — that the policy filing deadline was void as against public policy.
The Supreme Court reversed. "[W]e see no reason why Wisconsin’s policy determinations should control the result in this case," the majority wrote. Nor did the court see any reason why the period for seeking arbitration must mirror the statute of limitations applicable to a suit against the tortfeasor. The insured was legally competent and of age, the Court found, and had failed to explain why she could not have initiated arbitration during the two years following the accident. Given that, the two-year policy statute of limitations did not violate public policy and was fully enforceable to bar the plaintiff’s suit.
Chief Justice Thomas L. Kilbride dissented, arguing that since the insured would have had three years to file if she had collided with an insured driver while in Wisconsin, the public policy underlying the Uninsured Motorist statute required that the policy filing deadline be invalidated.