Illinois Amends Rule to Add Safeguards for Policyholders

Illinois Amends Rule to Add Safeguards for Policyholders 

On June 10, 2022, the Illinois Department of Insurance (DOI) published a Notice of Adopted Amendments related to Misrepresentation and False Warranties, 50 Ill. Adm. Code 941. 

Specifically, the amendments add safeguards to ensure Illinois drivers maintain appropriate auto coverage. According to the Notice, "These safeguards would require companies to perform appropriate due diligence prior to binding a policy. Many companies wait until a claim is filed to perform policy reviews to determine if the policy information was misrepresented. This leaves consumers believing they have auto insurance coverage when they do not."

The amended rule now prohibits an insurer from: 

  • Denying a claim based on misrepresentation or false warranty unless it was made with actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company; 
  • Denying a claim based on obtaining the readily available information after a loss has occurred or a claim is filed; or
  • Rescinding a policy or denying a claim after identifying an undisclosed driver in the household unless the undisclosed individual was driving the vehicle at the time of the accident.

The amendments became effective on May 31, 2022.


Link to Notice of Adopted Amendments (pgs. 9863-9866)