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Illinois appeals court says insurer coverage dispute must go to court
The ruling reverses a January 2025 summary judgment, sending the threshold question of whether uninsured motorist coverage applies back to the trial court after an appeal filed Aug. 27, 2026.
An Illinois appeals court ruled that an American Freedom Insurance Company dispute over uninsured motorist coverage cannot be pushed into arbitration, setting the question of whether coverage exists for a judge rather than an arbitrator.
The case stems from a rear-end crash on April 23, 2021, when the insured, while driving, was hit by an uninsured motorist and sought uninsured motorist damages under his American Freedom auto policy. The insurer investigated how the vehicle was used and, on Aug. 24, 2021, denied the claim, citing what the court described as purported work-related usage of the insured vehicle.
American Freedom later argued that the insured had to demand arbitration as a condition precedent, and it sought a declaratory judgment and a stay of arbitration. The trial court agreed and granted summary judgment for the insurer in January 2025, but the appeals court reversed on Aug. 27, 2026.
In its decision, the appeals court said the arbitration language covering “any dispute with respect to the coverage and the amount of damages” does not reach whether coverage exists at all, calling that a threshold judicial issue. The court did not decide whether the insured is owed anything, instead sending the coverage question back to the lower court and noting that the suit timing was timely under Illinois’s rule for weekend deadlines.