In an action arising from an automobile collision involving multiple tortfeasors, the appellate court reversed the trial court’s judgment ruling that plaintiff insurer was entitled to set off defendant’s claim for underinsured motorist benefits under one of the policies plaintiff issued with the amounts plaintiff paid under the bodily injury coverage of the same policy, since under the circumstances, defendant was allowed to seek both bodily injury and underinsured benefits under the same policy, but defendant was not entitled to a windfall or double recovery, and therefore, the cause was remanded to ensure defendant was not awarded more than the damages suffered.
Trujillo relies on Hoglund v. State Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272 (1992), in support of her argument that allowing a setoff when there is no danger of double recovery violates public policy. Hoglund was consolidated with Greenawalt v. State Farm Insurance Co., 210 Ill. App. 3d 543 (1991), which involved similar facts. Both cases involved a plaintiff with UM coverage who was injured by two tortfeasors, one of whom was fully insured and one of whom was totally uninsured (as opposed to underinsured). Hoglund, 148 Ill. 2d at 274. In each case, both drivers were at fault, and each plaintiff suffered injuries exceeding the combined coverage limits of the insured driver and her uninsured motorist coverage. Id. at 274-75. Each plaintiff settled with the insured driver and received the insured driver’s liability coverage limit of $100,000. Id. at 275. Each plaintiff then sought to obtain the limit of the uninsured motorist coverage under their own automobile insurance policies of $100,000. Id. at 274-75. Each plaintiff’s policy also contained a setoff provision stating any amounts paid or payable to the insured shall be reduced “ ‘by or for any person or organization who is or may be held legally liable for the bodily injury to the insured.’ ” (Emphasis omitted.) Id. at 275. The defendant insurance companies claimed a setoff for UM coverage of $100,000 by the $100,000 paid by the insured motorists, left nothing available. Id.
¶ 22 Our supreme court first considered the public policy behind the uninsured motorist provision of the Insurance Code was to place the insured in “substantially the same position as if the wrongful uninsured driver had been minimally insured.” Id. at 277. The court determined the literal interpretation of each policy’s setoff provision warranted the complete setoff. Id. at 278. The Hoglund court, however, also determined each setoff provision could not be read in isolation, but must be considered in conjunction with the plaintiffs’ reasonable expectation of receiving UM coverage because they paid a premium for it. In addition, a court must consider the public policy behind the uninsured motorist statute, and the coverage intended by the insurance policy, as well as the facts of each case. Id. at 279. When viewed in this way, our supreme court found a latent ambiguity in the policy language is disclosed, which occurs when the policy language is clear and intelligible and suggests a single meaning, but “ ‘some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings.’ ” Id. (quoting Black’s Law Dictionary 102 (3d ed. 1933)).
In this case, Trujillo is not seeking to recover under Allstate’s UM coverage. Rather, as in Gibbs, we are faced with claims against both the bodily injury liability coverage for the insured driver’s fault, and the UDIM coverage for the underinsured driver’s fault, which are distinct. Section 143a-2(4) of the Insurance Code permits a reduction for “amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle.” (Emphasis added.) 215 ILCS 5/143a-2(4) (West 2008). The statute does not expressly permit the reduction of UDIM benefits for amounts recovered under the bodily injury coverage maintained on the fully insured vehicle. The relevant public policy, therefore, is set forth in Hoglund and its progeny. We observe a tension may exist–particularly in the multiple tortfeasor context–between the conception of UDIM coverage as intended to place the insured in the same position as if injured by a motorist with insurance in the same amount as the UDIM policy, or as intended as a “gap-filler” which promises no more than the amount of the insured’s UDIM coverage. Hall, 277 Ill. App. 3d at 767. We conclude, however, the first conception is the preferred one, particularly where it is appropriate to favor the claimant in this context. See id.
¶ 43 In short, as previously noted, “[p]arties to a contract may agree to any terms they choose unless their agreement is contrary to public policy.” Sulser, 147 Ill. 2d at 559. Under the facts of this case, however, the resulting latent ambiguity in the Allstate policy allows Trujillo to seek both bodily injury and UDIM benefits. See Gibbs, 242 Ill. App. 3d at 156-57. Accordingly, the circuit court erred in granting judgment on the pleadings in favor of Allstate.