UM coverage applied to pedestrians

In this case, a teenager was hit by a car while riding a bicycle, and the boy’s father applied for UM benefits for his son as a “relative” under the direct insurance policy of the dad. (Credit: ambrozinio/

The Illinois Court of Appeals ruled against an auto insurance company that denied two separate coverage claims because the injured parties were not physically inside an insured car at the time of the accidents. The case was called Galarza vs. Direct Auto Ins. Co., 2022 III. App. LEXIS 421 (Fig. App. Ct. 2022).

This case combined two appeals from separate cases which both involved Direct Auto. However, each case was based on nearly identical policy wording that excluded uninsured motorist (UM) coverage for pedestrians struck by a fleeing vehicle because a pedestrian, by definition, cannot occupy a covered vehicle.

Facts about Galaza

Galarza was reportedly hit by a car as she exited a store on July 21, 2018. The driver of the vehicle, although he stopped and checked Galarza, drove away. When Galarza applied for UM benefits from Direct Auto, the carrier denied her claim because, by the express wording of the policy, she had to be occupying a covered car at the time of the injury in order to qualify for UM coverage.

Galarza sued for wrongful denial, alleging that the policy provision Direct Auto relied on was contrary to public order; she also alleged that she was entitled to a statutory fine of $60,000 as well as attorneys’ fees and costs because Direct Auto’s failure to settle her claim was an unreasonable delay.

In Direct Auto’s motion for summary judgment, it reaffirmed the express language argument and asserted that there must be evidence of actual physical contact between the covered automobile and the getaway automobile.

In response, Galarza argued that “the public policy that underpins MENA coverage [was] to place the insured in substantially the same position as if the liable party had purchased the liability insurance required by Illinois law.

Direct Auto counters that “neither the [state] legislature nor the [state] legal authority[d] UM coverage promulgated or interpreted to include pedestrians.

The circuit court was not influenced. He found that Galarza had produced evidence showing that Illinois law was unfavorable to policy provisions excluding UM coverage simply because the insured was not occupying a covered vehicle at the time of the injury, and the judges ordered Direct Auto to pay Galarza UM’s benefits. Instant Auto appealed.

Guiracocha Facts

In this case, a teenager was hit by a car while riding a bicycle, and the boy’s father applied for UM benefits for his son as a “relative” under the direct insurance policy of the dad. Direct Auto denied the claim because the boy was technically a pedestrian, as a bicycle is not considered a “vehicle”, while asserting the requirement of actual physical contact between a covered car and the alleged car with hit and run.

The boy’s father requested arbitration of the case, which was in accordance with policy requirements. Direct Auto filed for declaratory relief with the circuit court and requested a stay of arbitration until declaratory relief is rendered, which the court granted.

In the father’s response to the declaratory judgment filing, he pointed out that several non-party witnesses corroborated testimony that the boy was physically struck by a hit-and-run vehicle; he also, like Galarza, claimed that Direct Auto’s policy exclusion of UM coverage for pedestrians was against public order.

Direct Auto responded that the son could not receive UM benefits because the son was not an “insured” within the meaning of the policy; his injuries had not resulted from the use or maintenance of a covered automobile, to which the father argued that Direct Auto had not previously had an issue with the son’s insured status.

The lower court, however, read the wording of the express policy excluding pedestrian UM coverage and granted Direct Auto’s motion for summary judgment. Mr. Guiracocha and his son appealed.

Galarza: appeal procedure

While the trial court ordered Direct Auto to pay Galarza the UM benefits it claimed, the judges did not confront Galarza’s second accusation against Direct Auto, that the company’s refusal to pay was “vexatious and unreasonable”, thus entitling Galarza to a legal fine of $60,000. as well as fees and expenses. Since there was no final judgment on the second charge, this meant that the judgment as a whole was not final, which meant that the Court of Appeal did not have jurisdiction to hear the case. . The grouped appeals were dissociated and Direct Auto’s appeal was dismissed.

Guiracocha: appeal procedure

Although the express language of Mr. Guiracocha’s policy excluded UM coverage for a “pedestrian” like his son, the court said the exclusion was not determinative of the case. On the contrary, the judges said: “[t]Terms of an insurance policy that conflict with any law are void and unenforceable.

The court said Direct Auto’s reasoning made sense in the context of liability because it offered “car liability insurance, no pedestrian liability insurance.” (Emphasis in original). The same arguments, however, ran counter to public policy when applied to UM coverage for a pedestrian. The UM provisions, a the court said, were “expressly designed to mandate UM coverage” so that policyholders would be “placed in substantially the same position they would be in if injured…in an accident where the at-fault party was wearing the coverage. minimum liability required by law. (Quotation Direct Auto Insurance Co v Merx, 161 NE3d 1140 (Fig. 2020)). The court ruled that Direct Auto’s UM provisions were unduly restrictive, overturned the lower court’s decision and remanded the case for cohesive proceeding.

Editor’s note: There is a very specific reason states enforce minimum auto liability requirements, as these cases demonstrate: if a driver is at fault in a car accident, others injured in that accident will be compensated by that driver. If, if in Galarza and Guiracocha, the driver who caused the property damage or bodily injury skedaddles, then uninsured motorist coverage kicks in; if the driver does not leave but still has insufficient coverage, then this would be underinsured motorist coverage. In either scenario, the key element is that the insured, which may include a family member, has been injured by careven if the insured was not physically inside a car at the time of the accident.


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