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Docket No. 95337-Agenda 27-September 2003.

VUONG Y. LEE, Special Adm'r of the Estate of Tak Kwon Lee,
Deceased, Appellant, v. JOHN DEERE INSURANCE COMPANY,
 n/k/a Sentry Select Insurance Company, et al. (John Deere Insurance Company, Appellee).

Filed December 4, 2003

JUSTICE KILBRIDE delivered the opinion of the court:

In this case we must decide whether the failure of an insurancecompany to comply strictly with the statutory requirement that itprovide a space in its motor vehicle coverage application form for theapplicant to sign or initial indicating a decision to reject uninsured-motorist coverage operates to impose underinsured-motorist coveragein an amount equal to the bodily injury liability limits. In a declaratoryjudgment action brought by the estate of plaintiff killed in an accident,the circuit court answered that question in the affirmative andreformed the issued policy to provide underinsured-motorist insurancecoverage equal to the bodily injury liability limits. The appellate courtreversed and remanded. 334 Ill. App. 3d 807, 815. We granted leaveto appeal. 177 Ill. 2d R. 315. We allowed the National Association ofIndependent Insurers leave to file a brief as amicus curiae in supportof defendant John Deere Insurance Company. 155 Ill. 2d R. 345. Wenow reverse the judgment of the appellate court.

BACKGROUND

In September 1994, Andy W.Y. Lin (Lin), president of AsiaDistributors (Asia), a trucking firm, sought motor vehicle liabilityinsurance coverage for Asia's delivery trucks through Elite InsuranceAgency, Inc. (Elite), an insurance brokerage firm. Lin telephonedMichael Amwoza, president of Elite, and asked him to secure acoverage quote. He did not personally go to Elite's office and did notsign an application form. Elite sought a coverage quote fromInternational Risk Placement (IRP), an agent for John DeereInsurance Company (Deere). After receiving the quote, Elite prepareda form entitled "Non-Fleet Transportation Application" based oninformation supplied by Lin. Amwoza submitted the completed formto IRP. The application form contained no signature line for theperson or entity seeking coverage and contained no space for theapplicant to indicate rejection of additional uninsured-motoristcoverage as required by the Illinois Insurance Code (Insurance Code)(215 ILCS 5/143a-2 (West 1992)). Amwoza testified in a depositionthat he explained to Lin his right to purchase uninsured andunderinsured insurance coverage in an amount equal to the bodilyinjury liability limits and advised him of the changes in the premium.According to Amwoza, Lin did not wish to pay for the increasedcoverage. Lin denied that anyone had explained the coverage optionto him.

On September 8, 1994, in accordance with Deere's custom, IRPas Deere's agent, issued a temporary binder of coverage to Asia,effective September 2, 1994. The temporary binder provided bodilyinjury liability coverage in the amount of $1 million anduninsured/underinsured-motorist coverage with aggregate limits of$40,000. On that same date, IRP forwarded to Elite another formentitled "John Deere Insurance Company Selection/Rejection ofUninsured/Underinsured Motorist coverage-Illinois." Thisselection/rejection form was submitted to and filed by the IllinoisDirector of Insurance in 1992. It was designed to comply with theprovision in the Insurance Code requiring insurance companies todescribe briefly the uninsured-motorist coverage and to include aspace indicating the applicant's rejection of that coverage in anamount equal to the bodily injury liability limit.

On September 12, 1994, Deere issued its insurance policycontaining coverage identical to that described in the temporarybinder, even though it had not yet received the selection/rejectionform back from Elite. Deere then notified IRP that it had not yetreceived the signed selection/rejection form from Asia. IRP notifiedElite that the signed form must be returned by October 28, 1994, orthe policy would be canceled. A signed form was returned to IRP byElite and in turn sent to Deere.

Deere canceled the policy for nonpayment of premium onNovember 17, 1994. Asia operated without coverage from that dateuntil January 20, 1995, when a new policy was issued to reinstatecoverage with Deere. Again, IRP sent a selection/rejection form toElite, and again a signed form was returned to IRP by Elite only afterDeere demanded it on threat of cancellation. This form waspurportedly signed by Andy Lin, although Lin denied that thesignature was his. The premium for the uninsured/underinsuredcoverage was based on the statutory minimum limits. The policy wasrenewed for the year 1996 and was in force on March 1, 1996. Onthat date, plaintiff's decedent Tak Kwon Lee, one of Asia's drivers,was killed in a collision between his delivery truck and a car.

The driver of the car was at fault, and that insurance carrier paidits $20,000 policy limit to Vuong Lee, the decedent's widow. Leethen made an underinsured-motorist claim against Deere. Because theparties could not agree on the amount of available coverage, Lee fileda declaratory judgment action in the circuit court of Cook Countyagainst Deere seeking a determination of the amount of coverage. Leemoved for summary judgment, contending that the application formlacked the required space for rejection of increaseduninsured/underinsured coverage and thus violated section 143a-2(2)of the Insurance Code. Lee further argued that the separateselection/rejection form was ineffective. The trial court grantedsummary judgment, finding that the application had no signature orinitials indicating rejection of the additional coverage. The trial courtthen reformed the insurance policy to provide $1 million inunderinsured-motorist coverage. The court did not address the validityor effect of the selection/rejection form.

Deere appealed, and the appellate court reversed, holding that thetrial court misapplied the statute. 334 Ill. App. 3d at 808. Deereargued that its selection/rejection form was part of an ongoingapplication process and that the form complied with the statutoryrequirements. The reviewing court did not reach the question ofcompliance. Instead, it determined sua sponte that section 143a-2(2)applied only to uninsured-motorist coverage and not to underinsured-motorist coverage. Accordingly, the court held that since Lee's claimagainst Deere was for underinsured coverage, the application andsignature requirements of the statute were both inapplicable andirrelevant. 334 Ill. App. 3d at 814.

ANALYSIS

On appeal to this court, Lee argues that the appellate courtmisinterpreted the statute, claiming that uninsured- and underinsured-motorist coverages are linked together and that application proceduresapplicable to the former also apply to the latter. Because the questionof the proper interpretation to be afforded statutory provisions is aquestion of law, our standard of review is de novo. KnollsCondominium Ass'n v. Harms, 202 Ill. 2d 450, 454 (2002). The plainlanguage of the statute is the best indicator of the legislature's intent.Allstate Insurance Co. v. Menards, Inc., 202 Ill. 2d 586, 591 (2002).When the statute's language is clear, it will be given effect withoutresort to other aids of statutory construction. Petersen v. Wallach,198 Ill. 2d 439, 445 (2002).

Section143a of the Insurance Code (215 ILCS 5/143a (West1992)) mandates uninsured-motorist coverage in an amount equal tothe $20,000/$40,000 minimum liability limits for bodily injury or deathrequired by section 7-203 of the Illinois Vehicle Code (625 ILCS5/7-203 (West 1992)).

Section 143a-2 of the Insurance Code (215 ILCS 5/143a-2(West 1992)) sets out conditions and procedures for issuing orrejecting both uninsured- and underinsured-motorist coverage.Subsection (1) of section 143a-2 requires the insurance company toprovide uninsured-motorist coverage in an amount equal to the bodilyinjury coverage unless specifically rejected by the insured and alsorequires the company to provide a brief description of the coverageand to advise applicants of their right to reject coverage in excess ofthe amounts required by section 7-203 of the Illinois Vehicle Code.215 ILCS 5/143a-2(1) (West 1992).

Subsection (2) of section 143a-2 prescribes an exclusive meansof effecting a rejection of additional coverage, providing in pertinentpart as follows:

"After June 30, 1991, every application for motor vehiclecoverage must contain a space for indicating the rejection ofadditional uninsured motorist coverage. No rejection of thatcoverage may be effective unless the applicant signs or initialsthe indication of rejection." 215 ILCS 5/143a-2(2) (West1992).

Subsection (4) of section 143a-2 defines underinsured-motoristcoverage and provides that no policy of insurance may be issuedunless underinsured insurance is included in an amount equal to theuninsured-motorist coverage where the latter exceeds the minimumlimits required by section 7-203 of the Illinois Vehicle Code. 215ILCS 5/143a-2(4) (West 1992). The section contains no languageallowing a rejection of underinsured-motorist coverage.

We have previously construed this section to provide thatwhatever uninsured-motorist coverage the insured elects,underinsured-motorist coverage will be set, mandatorily, at theuninsured-motorist coverage level. DeGrand v. Motors InsuranceCorp., 146 Ill. 2d 521, 533 (1992). Thus, it is apparent that, as Leeargues, the two coverages are inextricably linked in the statute. If therejection of uninsured-motorist coverage is ineffective because of afailure to comply with statutory requirements, it follows necessarilythat coverage must be imposed in an amount equal to the bodily injuryliability limits. Since underinsured coverage is mandatory whereuninsured coverage in excess of the minimum statutory limits exists,it also follows that underinsured coverage, too, must be imposed in anamount equal to the bodily injury liability limits.

The appellate court analysis focused on the language in section143a-2(2) that, if taken literally, appears to apply only to the rejectionof uninsured coverage. The appellate court ignored, however, theresult required by the language in section 143a-2(4), and that is toimpose underinsured coverage in an amount equal to the uninsuredcoverage. Since the latter coverage would be equal to the bodily injurylimit if the rejection were to be ineffective, so too would the former.Thus, we hold that the appellate court erred in holding that theapplication and signature requirements in section 143a-2(2) wereinapplicable and irrelevant.

This holding is, however, not dispositive, because we must stilldecide whether Deere's selection/rejection form complied with thestatute and determine what coverage existed at the time of the fatalaccident. Although Deere argued before the trial court and theappellate court that its selection/rejection form was sufficient tocomply with the statutory requirements, that issue was not ruled on byeither tribunal. Deere repeats those arguments before us.

The selection/rejection form contained the following language:

"Illinois law requires that We, the Company providing theinsurance, are required to provide to You, the NamedInsured on the policy, higher limits forUninsured/Underinsured Motorist Coverage. These limits areto be equal to the policy limits provided for the Bodily InjuryLiability Coverage. You have the right to select a lower limitfor the Uninsured/Underinsured Motorist Coverage, but nolower than the Minimum Financial Responsibilityrequirement.

* * *

Uninsured/Underinsured Motorist Coverage providesinsurance for the protection of persons who are legallyentitled to recover damages from owners or operators ofuninsured/underinsured motor vehicles because of bodilyinjury, including death resulting therefrom.

Therefore, please indicate your choice below by checkingthe appropriate box and signing this form which is to bereturned to the company.

UNINSURED/UNDERINSURED

MOTORIST COVERAGE SELECTION/REJECTION

[ ] I choose to REJECT higher limits and coverage isrequested for the minimum required to meet the FinancialResponsibility Laws of the state."

This form also contains a brief description of uninsured-motoristcoverage and advises applicants of their right to reject it. Further, theform provides a check box to indicate the applicant's choice. A dateline and a signature line appear immediately below the check box.

That form, together with the "Non-Fleet TransportationApplication Form," was submitted to the Department of Insurancewith the appropriate fee, and accepted for filing. By law, the Directorof Insurance must require the filing of all policy forms and may requirethe filing of any "generally used riders, endorsements, applicationblanks and other matter incorporated by reference in any such policyor contract of insurance." 215 ILCS 5/143(2) (West 1992). The samestatute provides that "if the Director shall find from an examination ofany such policy form, rider, endorsement, certificate, applicationblank, or other matter incorporated by reference in any such policy sofiled that it violates any provision of this Code, contains inconsistent,ambiguous, or misleading clauses, or contains exceptions andconditions that will unreasonably or deceptively affect the risks thatare purported to be assumed by the policy, he shall order the companyor companies issuing such forms to discontinue the use of the same."215 ILCS 5/143(2) (West 1992).

Deere argues that because the Department allowed the filing ofthe selection/rejection form, it necessarily made a determination thatthe form does not violate the Insurance Code, contain inconsistent,ambiguous or misleading clauses, or contain exceptions and conditionsthat will unreasonably and deceptively alter the risks assumed underthe policy. Since the separate application and selection/rejection formswere both filed, Deere argues, the Director has implicitly authorizedthe use of a rejection form that is not physically contained within theapplication. Lee counters that, since there is no indication in therecord that the Director of Insurance required the filing of either theapplication or the selection/rejection form, and since the Director didnothing more than affix the Department file stamp to the documents,no inference of Department approval arises.

It is true, as Deere argues, that the approval of the Director isentitled to great weight, although it is not conclusive on the courts.Kirk v. Financial Security Life Insurance Co., 75 Ill. 2d 367, 376(1978). However, we cannot decide this issue on the basis of theDirector's approval even if it was given. The application form and theselection/rejection forms are separate documents. The recordconclusively establishes that the application form was submitted toDeere's agent without a completed selection/rejection form. The latterform was not executed by the insured until after issuance of the actualpolicy of insurance, replacing the temporary binder. Thus, we mustdetermine whether this two-step process operates to defeat therejection of coverage in this case.

The selection/rejection form contains the requisite explanation ofuninsured-motorist coverage, a space for rejection of the coverage,and a signature line. If this content appeared in the application form,it would be sufficient to accomplish a rejection of the coverage.Arguably, it could be sufficient if both forms were submittedsimultaneously to the applicant, or if the selection/rejection form wereseparately submitted and signed prior to the issuance of the insurancepolicy. That, however, did not happen in the case before us.

Deere argues that the procedure used to complete the applicationprocess was commercially reasonable and consistent with prior Illinoisprecedent. Since coverage was initially secured through issuance of atemporary binder and since execution of the selection/rejection formwas requested when the binder was issued, Deere argues thatsubmission of that form was part of the application process.

This court has recognized that an insurance binder is in the natureof temporary insurance, that such a contract can be oral and that it willbe presumed that the parties contemplate that a policy will be issuedcontaining such conditions and limitations as are usual in such cases,or that have been used before between the parties. Zannini v. RelianceInsurance Co. of Illinois, Inc., 147 Ill. 2d 437, 454-55 (1992),quoting Devers v. Prudential Property & Casualty Insurance Co., 86Ill. App. 3d 542, 544 (1980), quoting Cottingham v. National MutualChurch Insurance Co., 290 Ill. 26, 33 (1919).

In Anderson v. Vrahnos, 149 Ill. App. 3d 251 (1986), theappellate court held that the legislature did not intend that bindersshould be considered policies for purposes of the offer ofunderinsured-motorist coverage required by the version of section143a-2 of the Insurance Code in effect at that time. Hence, a binderauthorized by the insurance company did not, as a matter of law,include underinsured-motorist coverage.

The same rationale, Deere contends, applies to the currentversion of the statute and the effect of the binder issued by Deere. Thestatute does not require execution of the rejection form prior toissuance of a binder. Since Elite, on behalf of Asia, requestedminimum limits of uninsured/underinsured-motorist coverage, thatcoverage was properly bound and higher limits were not imposed byoperation of law. While the binder was in effect and pendingcompletion of the application process, the company requestedexecution of the selection/rejection form. The company ran the risk ofincreased uninsured/underinsured-motorist exposure after issuing thepolicy and prior to receiving the executed selection/rejection form.Because the statute does not expressly require the form to be executedprior to the binder or before issuance of the actual policy, Deerecontends that rejection of the coverage was effective when the formwas executed by Lin. Deere argues also that since the executed formwas returned before the accident occurred, the additionalunderinsured-motorist coverage was not then in effect.

A similar argument was rejected by the appellate court in Woodv. National Liability & Fire Insurance Co., 324 Ill. App. 3d 583(2001). That court affirmed summary judgment directing reformationof an insurance contract to provide uninsured/underinsured-motoristcoverage equal to the bodily injury limits where a separate formrejecting the additional coverage was submitted after issuance of thepolicy. The initial application form did not contain a provision for therejection of the additional coverage. Thus, the additional coveragewas contained in the policy at the time it was issued. Wood, 324 Ill.App. 3d at 586-87. The court reasoned:

"[I]t is clear that the legislature intended the applicationprocess to cease once an insurance policy is issued. In 1990,the legislature modified section 143a-2 so that the word'applicant' replaced the word 'insured.' [Citation.] Before thechange, the 'insured' had the right to elect or reject[uninsured-motorist] coverage. In its present form, thestatute 'leaves no room for doubt as to whom [uninsured-motorist] coverage must be explained.' [Citation.] We believethat the revision makes it clear that the applicant, not theinsured, be provided with a description of the [uninsured-motorist] coverage and that the applicant be given anopportunity to reject the coverage. The alteration issignificant because it is the applicant who needs to know theextent and amount of his or her coverage before he or sheagrees to enter into a contract of insurance.

On the date the election form was signed, Wood was nolonger an applicant because he had been issued a policy.Therefore, the election form could not serve as a validrejection of the [uninsured/underinsured-motorist] coverage."(Emphasis in original.) Wood, 324 Ill. App. 3d at 587.

The court further noted that once the policy was issued, theapplication process was complete. Thus, the company's argument thatthe application process was "ongoing" was unavailing. Wood, 324 Ill.App. 3d at 587.

The Wood rationale was examined in Isaacson v. Country MutualInsurance Co., 328 Ill. App. 3d 982 (2002), where the court held thata coverage rejection executed after issuance of the policy waseffective when the policy originally provided uninsured-motoristcoverage equal to the bodily injury limits, but was reduced on theinsured's express request in return for a reduction in premium. Thecourt held that Wood was inapposite because in that case the policywas issued with the reduced limits before execution of the rejectionform. Isaacson, 328 Ill. App. 3d at 986.

A postissuance endorsement to a valid policy is not necessarilyprohibited by any statute and, indeed, that alternative was recognizedas valid in Wood, where the court observed:

"Moreover, once the rejection form had been executed,National could have issued an addendum or a new policyreflecting the change in [uninsured/underinsured-motorist]limits." Wood, 324 Ill. App. 3d at 588.

Here, Deere did not use either alternative. Therefore, theuntimely rejection had no effect. While Deere argues that theapplication process was ongoing and that the return of the rejectionform was part of this process, there appears to be no justification forDeere to issue the policy before receipt of the selection/rejection form.Under the plain language of the statute, Deere could not have lawfullyissued the policy without uninsured/underinsured-motorist coverageequal to the bodily injury limits. Accordingly, these limits were ineffect when the insured's employee was killed in a covered accident.For Lin's rejection of the additional coverage to be effective, Deere'stwo-step application process must have been completed before theissuance of the policy. In the absence of a complying rejection, Deerewas in violation of the statute when it issued the policy, and nosubsequent rejection of the additional coverage could have been validunless of course, as in Isaacson, the additional coverage was providedunder the original policy.

Finally, we address the "practicality" arguments urged by Deereand its amicus. The application process began with a telephone callfrom Lin to Amwoza at Elite. Amwoza obtained the information heneeded to secure a quote and then submitted the application,unsigned, to Deere on Lin's behalf. Deere and its amicus note that thispractice is common in the insurance industry and argue that it iscommercially reasonable. The trial court found that reformation of thepolicy was required because the application submitted by Elitecontained no signature or initials indicating rejection of the additionalcoverage. Deere and its amicus contend that if the trial court's rulingwere upheld, applicants could no longer quickly obtain coverage, asmight be necessary in many situations, by means of a temporary binderof insurance procured by telephone. This is an argument betteraddressed to the legislature.

Given our disposition of this case, however, the concerns ofDeere and its amicus are not well founded. Our holding is not basedon the lack of a signature on the application form submitted on Lin'sbehalf by Elite. Rather, the result we reach is compelled because therejection of coverage equal to bodily injury limits did not occur duringthe application process while the temporary binder was in effect. Thiscase does not require us to determine whether the binder must initiallyinclude the higher coverages. Not until after the insurance policy wasissued with uninsured/underinsured motorist limits at the statutoryminimum was the selection/rejection form completed by Lin. Since Linwas no longer an "applicant," this procedure clearly was notauthorized by the statute. The trial court properly granted summaryjudgment to Lee.

CONCLUSION

For the reasons we have discussed, we reverse the judgment ofthe appellate court and affirm the judgment of the circuit court.

Appellate court judgment reversed;

circuit court judgment affirmed.