This case arises from a tragic car accident where Thomas T.D. Polk and his wife, Katarzyna Kurek-Polk, were struck while assisting another motorist. Thomas was injured, and Katarzyna died. The couple received $100,000 from the at-fault driver and $800,000 from a settlement with AMCO Insurance, which held a $1,000,000 underinsured motorist (UIM) policy. They also held $500,000 UIM policies with Progressive and Secura. All three policies contained proportionate liability clauses and 'anti-stacking' provisions stating that total recovery could not exceed the highest limit under any single policy. After rejecting a $220,000 settlement offer from Secura, Polk sued Progressive and Secura for breach of contract, arguing he could stack the coverage limits to recover more than the $1,000,000 cap. The district court granted summary judgment for the insurers, ruling that the anti-stacking language was unambiguous and that the total recovery was already capped at $1,000,000.
The Seventh Circuit applied de novo review to the contract interpretation, governed by Illinois law. The court emphasized that Illinois courts enforce clear and unambiguous insurance policies as written. The policies at issue explicitly stated that if multiple policies apply, the maximum limit of liability is the highest limit under any one policy. The court found the anti-stacking language unambiguous, citing Illinois precedent that such provisions are valid. Polk argued that the statute's use of the singular 'insured' implied that stacking was permitted when multiple insureds were injured in one accident. The court rejected this, noting that the statute does not authorize stacking in such scenarios and that Polk failed to identify any case supporting his interpretation. Furthermore, the court held that the policies explicitly authorized set-offs against payments from other insurers. Requiring Progressive and Secura to pay their proportionate shares without offsetting the AMCO settlement would allow Polk to recover more than the $1,000,000 cap, violating the clear intent of the anti-stacking provisions. The court also dismissed Polk's argument regarding the premium rule of construction, stating that paying multiple premiums does not override clear anti-stacking language.
The decision confirms that anti-stacking provisions in Illinois UIM policies are enforceable and will cap total recovery at the highest single-policy limit, regardless of how many insureds are injured or how many premiums were paid. Insurers are entitled to offset their liability by the amounts already recovered from other sources up to that cap. The ruling leaves no ambiguity regarding the interaction between proportionate liability clauses and anti-stacking language in this context. The case was remanded to the district court to enforce the $100,000 payment from Secura to reach the $1,000,000 total, as Progressive was found to have no further obligation.
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