Make sure your demand for uninsured motorist arbitration is "unequivocal."

The case is Willis & Willis v. United Equitable Ins. Co., 2017 IL App (1st) 162308. 

Facts

On August 5, 2008, Valentina Willis' car was involved in an accident with a stolen Hertz rental car. Kathy Willis was a passenger in the car when the accident occurred. The defendant insured Valentina's car. Hertz denied coverage as the car was stolen, so Valentina made a claim under her uninsured motorist coverage with United Equitable. That section of her policy provided that arbitration must be commenced within two years of the accident. 

On August 26, 2009, Valentina's attorney sent a letter to the insurer stating she was seeking "compensation under the uninsured motorist provision" of the policy and continued "we hereby make demand for arbitration if this claim is not resolved within two years after the accident." 

On September 11, 2009, her attorney sent another letter to the defendant indicating that Hertz denied coverage and renewing the arbitration demand by saying "we hereby make demand for arbitration if this claim is not resolved within one year after the accident."

On February 14, 2011, her attorney sent another letter to the defendant that again "made a demand for arbitration under her policy" and "renewed [her] request for arbitration."

On September 18, 2012, Valentina's attorney filed a claim with the American Arbitration Association. On September 25, 2012, United Equitable rejected her uninsured motorist claim, so plaintiffs filed a declaratory judgment action which ultimately alleged breach of contract, bad faith pursuant to Section 155 of the Illinois Insurance Code, and sought to compel arbitration of the claim. United Equitable filed a counterclaim seeking a finding that it did not have to cover the accident because the plaintiffs "did not commence arbitration within 2 years of the accident" and did not "select an arbitrator and demand arbitration" within the 2 years.

Trial Court Ruling

The trial court granted the plaintiffs' motion for summary judgment as it deemed the two 2009 letters Valentina's attorney sent to United Equitable were sufficient demands for arbitration pursuant to the policy. United Equitable appealed.

Appellate Court's Decision

When construing the terms of an insurance policy, the Court noted that contract law principles apply. In determining whether Valentina complied with the terms of the policy, it had to decide whether or not the August 26, 2009 letter or the September 11, 2009 letter sufficiently requested arbitration. The Court looked at its previous decisions and decided it had to determine whether Valentina made an unequivocal demand for arbitration. 

The Court determined that because the letters by plaintiffs' counsel to United Equitable demanded arbitration if the claims were not resolved within a given time-frame, they were contingent demands. The Court held that a contingent demand by definition was equivocal. Accordingly, the Court reversed the trial court's ruling and remanded the case for further proceedings.

The Takeaway

What this means is that should you ever find yourself in a situation where you might need to make a claim under your uninsured motorist coverage, review the terms of policy and make sure you (or your attorney) strictly comply with them. If the insurance policy says you must demand arbitration, make sure to do so without making the demand contingent on another event as we now know there is precedent to hold that "demand" insufficient. Also, if the policy sets time limits within which the demand must be received, make sure you meet those deadlines. After all, an insurance policy is a contract, and generally speaking, courts will seek to honor and give effect to the parties' agreement.