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If you are handling Illinois personal injury or wrongful death claims, prejudgment interest is no longer something to think about at the end of the case. It needs to be part of the reserve from the moment suit is filed.

Since 735 ILCS 5/2-1303(c) took effect on July 1, 2021, compensatory damages in Illinois PI and wrongful death cases have been subject to 6% annual prejudgment interest running from the date the action is filed, subject to the statute’s limitations and tolling provisions.

Miss the key timing requirements in the statute, and the result can be substantial added exposure on top of the compensatory verdict.

The Core Exposure Formula

The formula is straightforward. The exposure turns on tracking the right dates and preserving the written-offer setoff where appropriate.

PJI = Compensatory Damages × 6% × Years from Filing to Judgment (subject to the 5-year cap, tolling, and any qualifying written-offer reduction)

On a $500,000 compensatory verdict with a four-year litigation timeline, that is $120,000 in prejudgment interest before post-judgment interest is even considered.

PJI applies to the compensatory portion of the judgment. It does not apply to punitive damages, sanctions, statutory attorney’s fees, or statutory costs. In general, the clock begins on the date the action is filed, not the date of the underlying incident, and it runs for a maximum of five years. For injuries or deaths that occurred before July 1, 2021, accrual begins no earlier than July 1, 2021. That caps the absolute worst-case exposure at 30% of the compensatory award.

One additional point: once judgment is entered, post-judgment interest begins to run under Section 2-1303 as well. So delay after verdict can continue to increase total exposure. In most cases, the post-judgment rate is 9%, though the statute provides a 6% rate for governmental judgment debtors.

The Setoff: Your Single Best Cost-Control Lever

The statute also gives defendants a practical way to reduce or eliminate PJI exposure: a qualifying written settlement offer made within the first 12 months after the action is filed.

Here is how the setoff works:

• If the judgment is equal to or less than the defendant’s highest qualifying written settlement offer, no prejudgment interest is owed.
• If the judgment exceeds the defendant’s highest qualifying written settlement offer, PJI is calculated only on the difference.
• If no qualifying written settlement offer is made, PJI is calculated on the full compensatory portion of the judgment. It still does not apply to punitive damages, sanctions, statutory attorney’s fees, or statutory costs.

Example: A $175,000 written offer is made in month 10. Plaintiff rejects it. A $200,000 verdict is returned after three years of litigation. PJI accrues only on the $25,000 gap, not the full verdict. That reduces PJI exposure from $36,000 to $4,500.

The 12-month window should be treated as a hard diary date. Calendar it from the date the action is filed, not served. If more investigation is needed before the case can be fully valued, that process needs to start early. The statute does not require the best offer within 12 months. It requires a qualifying written settlement offer within that window if the defense wants the benefit of the setoff.

What Counts as a Valid Written Offer?

Not every offer will qualify. Based on the statute and recent Illinois authority, a written settlement offer intended to preserve the setoff should be:

1. In writing
2. Made within 12 months after the later of July 1, 2021 or the filing of the action, depending on the statute’s timing provisions
3. Framed as a straightforward settlement offer rather than a conditional high-low structure. In Johnson v. Advocate Health & Hospitals Corp. (2025), the First District held that a high-low proposal did not qualify as a settlement offer under the statute.

Exclusions

Two exclusions should be part of the initial exposure analysis on every Illinois file.

1. Government defendants. PJI cannot be assessed against the State of Illinois, units of local government, school districts, community college districts, or other governmental entities. If your insured qualifies as a governmental entity, that issue should be analyzed at the outset because it may remove PJI exposure entirely.
2. Voluntary dismissal and refiling. Time during a voluntary dismissal period does not count toward PJI accrual. In any file with a dismissal-and-refiling history, that procedural timeline should be tracked carefully because it can materially affect the calculation.

Claims File Checklist: Illinois PJI

1. Filing date confirmed as Day 1 of potential PJI accrual
2. 12-month deadline diary from the filing date for a qualifying written settlement offer
3. PJI exposure calculated and incorporated into reserves
4. Exposure recalculated at major litigation milestones based on expected time to verdict
5. Written settlement offer issued within the statutory period and documented in the file
6. Offer structure reviewed to avoid relying solely on a conditional high-low arrangement in light of Johnson
7. Government-entity status analyzed where applicable
8. Voluntary dismissal/refiling history reviewed for tolling impact

Bottom line

In Illinois, prejudgment interest is now part of the reserve conversation from day one. The carriers and claims teams that handle it best will be the ones that calendar early, evaluate early, and document a qualifying written offer before the statute turns delay into added exposure.

Update from:

• Chase Gruszka, Chicago Partner

This article is intended for informational purposes only and does not constitute legal advice. Please consult with an attorney to discuss your specific legal situation.