Viewpiont: Idaho Supreme Court Finds Minimum Limit UIM Coverage Illusory

This goes to what is meant by illusory coverage.

Official response and confirmed impact

The insured contended that if a coverage can be sold that doesn’t apply to all customers, it is illusory.

The insurance company countered that as long as coverage would apply to any customers, it is not illusory.

The question remains, was this policy wording illusory, or not?

This makes sense on the face because if this insured was involved in an accident with any insured in Idaho, the policy would never pay the full limit of insurance due to the definition of underinsured motor vehicle, coupled with an offset provision in the policy that allowed the insurance company to reduce any UIM payment by amounts recovered by the other driver’s liability policy, and the fact that the insured elected the state minimum limit of insurance.

Incident under investigation

Courts in many cases are siding with the lower court and the insurance company on this issue, especially when dealing with commercial insurance customers.

In this case, however, the Idaho Supreme Court sided with the consumer, concluding that there was no instance where this customer could recover the full limits of their UIM coverage, therefore making the coverage illusory.