Automobile Insurance

Good-Faith Effort

Under Illinois law, you are required to have a minimum amount of insurance on your motor vehicle. When you purchase or lease your vehicle from a dealership, you will be required to show proof of your insurance before you are allowed to drive the vehicle off of the lot.

Your insurance policy is governed by the Illinois Insurance Code and by the terms of your individual contract of insurance with your insurance company. Your duties under the policy in making a claim are usually outlined in the policy. The policy also details the insurer's duties. Yet, you may not be aware that Illinois law imposes upon the insurer a duty to make a good-faith effort to settle your claim.

Insureds often complain that insurance companies maintain a policy of "delay and deny" on claims so that insureds are discouraged to the point where they stop pursuing the claim or simply settle for less money after months or sometimes years of haggling. In order to combat these tactics, Illinois requires an insurer to enter into meaningful settlement negotiations by making a good-faith offer. There are potentially serious consequences if the insurer acts in bad faith.

If the insurer does not make a good-faith offer in a timely fashion, the plaintiff may sue the insurer for not only the amount of the policy but also for damages in excess of the policy. This penalizes the insurer by requiring it to pay more than it contracted to pay under the insurance policy. This situation arises when the plaintiff's injuries are valued at an amount greater than the policy limits of the insured.

Here is an example. You are hit head-on by a driver. It turns out that the policy limit on the driver's automobile policy is $100,000. However, you have a spinal injury resulting in the loss of use of your legs, an injury that would be valued at well over the policy limit. Even though you make a demand of the driver's insurance company for the total proceeds of the policy, the insurer refuses to tender the policy limits of $100,000. If the jury awards you more than $100,000 at trial (a fairly likely scenario), such as $1 million, you can sue the insurance company for the difference, $900,000 plus interest. On the other hand, if the insurance company had settled with you for the amount of the policy before the trial, it would not be required to pay any additional money.

This website is not intended to constitute legal advice or the provision of legal services. By posting and/or maintaining the website and its contents, Lucas Law does not intend to solicit business from clients located in states or jurisdictions outside of Illinois wherein Lucas Law or its individual attorney(s) are not licensed or authorized to practice law.