In State Farm Mut. Auto Ins. Co. v. Coe, No. 1-05-1891, 2006 WL 2547329 (Ill. App. Dist. 1 Sept. 5, 2006), an Illinois appeals court ruled that the term “amount payable under this coverage” in reference to underinsured motorist coverage did not include the total damage incurred by the insured.

 

Steven Coe, a police officer, was injured when he was struck by a car while directing traffic. The driver's auto liability limits were $50,000. Coe received $100,000 in workers compensation benefits for his injuries but sought special damages of $150,000.

 

Coe was insured for auto liability by State Farm and had a $100,000 limit for underinsurance motorist coverage. The policy promised to pay “damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle.”

 

Because Coe had already collected $50,000 from the driver's insurance and $100,000 in workers compensation, State Farm said that Coe was not entitled to any benefit from the underinsured motorist portion of the policy. Coe argued that his special damages were more than $150,000.He further contended that the policy language “amounts payable under this coverage” meant the total damages, not the policy limit. He also argued that the term is ambiguous.

 

However, the court stated that the phrase, “'amount payable under this coverage' is not ambiguous but clearly refers to the $100,000 available under the underinsured motorist provision, not the total amount of Mr. Coe's damages.”

 

Coe also said that allowing an offset for his workers compensation payments against the underinsured motorist coverage without considering his total damages violated the purpose of the underinsured motorist statute. The court said that the purpose of the insurance is not for the insured to receive more than the coverage limits available in the policy. Thus, the setoff did not violate public policy.