Will Illinois’ Courts Enforce a One-Sided Insurance Contract?
When you have health insurance, disability insurance, or property insurance, you may sometimes find that the insurer has an unreasonable amount of power over you — perhaps more than you anticipated when you purchased the policy years before. This issue is all too common. Insurers often design and execute unfair contracts designed to put you, the policyholder, in a weakened position.
Suppose you’ve had your claim denied or mishandled due to an underlying contract provision that you believe is unreasonably oppressive. In that case, you may have a right to bring a lawsuit against your insurance carrier based on “unconscionability.”
In this article, the insurance lawyers at Bryant Legal Group explore how unconscionable contracts are defined under Illinois law. We’ll also suggest ways you can protect yourself from an unfair contract.
What Is an Unconscionable Contract?
Sometimes, a contract or insurance policy is so fundamentally unfair that the courts will not uphold the terms. As with most contract law issues, “unconscionability” isn’t always clear-cut or easy to identify. Under Illinois contract law, you must prove that a contract or a clause is both procedurally and substantively unconscionable.
Procedural Unconscionability: Could You Make a Meaningful Choice?
Procedural unconscionability is generally found where there was some impropriety, imbalance of power, or another problem during the contract formation process that prevented either party from making a meaningful choice. For example, if the insurance company actively misrepresented one of the contract provisions — say, one of the disability coverage exclusions — then that would likely be considered procedurally unconscionable, as the policyholder did not have the understanding necessary to make an informed and meaningful decision. In that instance, you will need evidence of the insurance company’s misrepresentation.
Substantive Unconscionability: Was the Policy One-Sided or Oppressive?
A policy is substantively unconscionable if its clauses, terms, or provisions are fundamentally unfair, one-sided, or overly harsh. If the terms of the contract seem obviously oppressive, even without context, it may be substantively unconscionable.
For example, if your insurance contract requires you to pay a substantial fee when you submit a claim for benefits, it may be substantively unconscionable. A large fee could limit a financially burdened policyholder’s ability to receive the benefits they’re owed, making it unfairly burdensome.
What Happens if an Insurance Policy or Clause Is Unconscionable?
If a particular provision or term of the insurance policy is deemed unconscionable under Illinois law, the courts will take one of two approaches:
- Enforce the underlying policy and ignore the invalidated clause or contract provision
- Modify the problematic clause or provision, making it more favorable to you (the policyholder)
For example, suppose your insurance contract includes a mandatory, binding arbitration provision that is deemed unconscionable. In this case, the court may, depending on the circumstances surrounding the contract and how it was entered, ignore the mandatory arbitration provision entirely and refuse to impose its demands. Or, the court may modify the provision so you can voluntarily enter binding arbitration or even engage in non-binding arbitration to resolve your insurance dispute.
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What Should I Do if I Think My Policy Is Unconscionable?
If you think that your insurance policy seems excessively one-sided, or you believe that the company failed to disclose some of its essential terms, you should immediately consult an experienced Illinois insurance lawyer. A lawyer can carefully examine your policy’s language, investigate the circumstances surrounding the policy’s formation, and provide you with accurate and practical advice.
Depending on your circumstances, you may be able to file a lawsuit that invalidates the policy’s unconscionable terms, helping you get the coverage or result that you deserve.
Contact Bryant Legal Group and Get the Help You Need to Fight the Insurance Company
At Bryant Legal Group, P.C., our attorneys have decades of experience advocating on behalf of insurance policyholders in disputes with their insurance carriers, from disability insurance conflicts to bad faith issues and more. We take a fundamentally client-oriented approach and work closely with clients through every stage of representation. This highly-engaged, comprehensive approach to handling insurance litigation has helped us achieve substantial and consistent results for our clients over the years.
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