If you travel much, you’ve been there. You’re at the car rental counter, answering the clerk’s questions regarding whether you will or won’t purchase insurance on the car you’re renting. Many people, of course, decline this coverage. So what happens if you’re injured, and the at-fault driver declined coverage on his rental car and has personal insurance with a low policy limit? According to a recent decision from the First Appellate District, your own insurer must pay (if you have underinsured motorist coverage) just the same as if the other driver was driving his own vehicle, rather than a rental.
Jeffrey and Stephanie Hadary were injured while riding in their car after another car, driven by Carlos Velez, crashed into them. Velez’s car was a rental and was owned by Hertz Corporation. Velez had turned down Hertz’s insurance when he rented the car. After the accident, the Hadarys recovered $40,000 from Velez’s insurance company, which was the limit under his policy. Since that $40,000 sum did not completely compensate the Hadarys for all of the injuries they suffered, they filed an underinsured motorist claim with their insurance company, Safeway Insurance Co.
Safeway, however, refused to pay, which led the Hadarys to sue their insurer. The case centered upon Hertz’s role in compensating the Hadarys for the harm they’d suffered. The Hadarys argued that Hertz had offered Velez primary insurance, and, when Velez declined to purchase that insurance, that removed from Hertz any obligation to pay for any damages that its renter, Velez, caused. If that was true, Safeway would be liable for the amounts in excess of the sum paid by Velez’s personal insurance.
Safeway, though, argued that both Velez’s personal insurance and Hertz’s liability as the owner of the vehicle must be exhausted before it (Safeway) had a legal obligation to pay. The trial court sided with Safeway, concluding that the Hadarys were required to explore all of the avenues related to Hertz’s liability before they could seek payment from their insurer under the underinsured motorist coverage.
The appeals court, however, determined that this outcome was wrong. It would be a violation of public policy “to construe Safeway’s policy to mean that a rental car company’s liability pursuant to the financial responsibility statute applies before Safeway’s obligations under the underinsured motorist provision.” The trial court’s ruling misstated Illinois law and policy. To follow the ruling advanced by the trial court would yield an “absurd” result. Under that scenario, the Hadarys would potentially be entitled to receive more benefits as a result of being hit by a Hertz car driven by Velez than if they had been hit by Velez while he was driving his own personal vehicle. In the latter circumstance, there would have been no doubt that Velez’s insurance would have paid $40,000 and that the Hadarys’ underinsured motorist coverage would have applied after that. Creating such an artificial distinction between drivers of rental cars and drivers operating their own cars was not what the legislature intended, the appeals court concluded.
When you’re injured in an auto accident, there are many hurdles involved in seeking the compensation you deserve, including dealing with (and overcoming obstacles set up by) insurance companies. For advice and representation upon which you can rely, talk to the hardworking Chicago auto accident attorneys at Katz, Friedman, Eisenstein, Johnson, Bareck & Bertuca. To set up a free case evaluation, contact us at 312-724-5846 or through our website.
More Blog Posts:
The Legal Principle of Tolling and Its Impact on Your Illinois Auto Accident Case, Chicago Injury Attorneys Blog, Dec. 7, 2016
Back Injuries An Increasing Concern For Airlines, Chicago Injury Attorneys Blog, Aug. 11, 2016