An Illinois insurer that denied uninsured motorist coverage cannot push the dispute into arbitration, a state appeals court ruled.
On August 27, 2026, the Appellate Court of Illinois reversed summary judgment for American Freedom Insurance Company and sent the case back to a lower court, finding the coverage fight belonged before a judge, not an arbitrator.
It started with a rear-end crash. On April 23, 2021, the insured was hit by an uninsured motorist while driving and filed a claim for uninsured motorist damages under his American Freedom auto policy. The insurer investigated how he used the vehicle and, on August 24, 2021, denied the claim - citing what the court described as "purported work-related usage of the insured vehicle." He never demanded arbitration.
Two years later, he sued for breach of contract. The insurer answered with a request for a declaratory judgment and a stay of arbitration, arguing that his failure to demand arbitration - a condition precedent, it said - relieved it of any duty under the policy. A trial court agreed and granted the insurer summary judgment in January 2025.
The appeals court read the policy differently. It sent to arbitration "any dispute with respect to the coverage and the amount of damages," language mirrored in section 143a of the Illinois Insurance Code. But that wording, the court said, does not reach the question the insurer wanted an arbitrator to answer.
Relying on decades-old state supreme court precedent, the court held that arbitration under that language covers two things: whether the insured can recover from the uninsured driver, and how much. Whether coverage exists at all is for a court.
That was the whole dispute. American Freedom denied coverage based entirely on its assertion that the insured failed to report a change in the vehicle's use, which the court called "a threshold judicial issue: whether coverage existed at all." No coverage question goes to arbitration until a court resolves it first.
Timing did not save the insurer. The policy required suit within two years of the accident. The deadline fell on a Sunday, and the insured filed the next Monday - on time under Illinois law, which rolls weekend deadlines to the next business day.
The reversal does not decide whether the insured is owed anything. It returns the coverage question to the trial court.
