Illinois’ solution to an insurance company’s delay, deny and defend tactics is section 155 of the Illinois Insurance Code, which provides an extra-contractual remedy to policyholders whose insurer’s refusal to recognize liability and pay a claim under a policy is vexatious and unreasonable.1 Section 155 of the Code is intended to aid the insured and to discourage insurers from profiting by their superior financial positions while delaying in the payment of contractual obligations.2
Continue Reading Insurance Company’s Long Duration of Negotiations and Stalling Tactics Supports Plaintiff’s Claim for “Bad Faith”

The Illinois Supreme Court recently overturned the Court of Appeals’ decision in American Family Mut. Ins. Co. v. Krop, 82 N.E. 3d 533, 2017 IL App (1st) 161071 (Ill. App. 2017). As discussed in my post on June 14, 2017, the Illinois Appellate Court had concluded that the insured’s claim against their agent for negligent procurement of insurance did not arise until the insured knew or reasonable should have known of the injury, i.e., at the moment when the insurer denied coverage.
Continue Reading Buyer Beware: Negligence Claims Against Your Agent May Arise On The Day You Get Your Policy!

Last year in one of my blogposts, I wrote about Windridge of Naperville Condominium Association v. Philadelphia Indemnity Insurance Company, and the issue whether appraisal is appropriate to resolve a dispute over the cost of repairing physically undamaged siding of townhome buildings to remedy a mismatch with repaired damaged siding. There, a federal district court in Illinois denied the Association’s motion to compel appraisal on the “matching” issue, reasoning it was a question of coverage, not loss amount, and inappropriate for appraisal.1
Continue Reading Is a “Matching” Dispute Appropriate for Appraisal? – Update

The Seventh Circuit Court of Appeal’s opinion this week in Streit v. Metropolitan Casualty Insurance Company,1 is a major victory for policyholders in Illinois. There, the Seventh Circuit affirmed the lower court judgment entered in favor of my clients, Wesley and Barbara Streit, arising out of Metropolitan’s failure to cover a fire loss to their residence in Illinois. The Seventh Circuit’s ruling establishes that an insurance policy exclusion which precludes innocent co-insureds from recovering violates the minimum level of protection afforded by the Illinois Standard Fire Policy.
Continue Reading Standard Fire Insurance Policies Still Provide Basic Protections—A Major Victory for Policyholders and Merlin Law Group

Section 13-214.4 of the Illinois Code of Civil Procedure provides that “[a]ll causes of action brought by any person or entity under any statute or any legal or equitable theory against an insurance producer1 . . . concerning the sale, placement, procurement, renewal, cancellation of, or failure to procure any policy of insurance shall be brought within 2 years of the date the cause of action accrues.”2 Section 2–2201(d) of the Illinois Code of Civil Procedure anticipates negligence actions against insurance producers: “[w]hile limiting the scope of liability of an insurance producer, . . . the provisions of this [s]ection do not limit or release an insurance producer . . . from liability for negligence concerning the sale, placement, procurement, renewal, binding, cancellation of, or failure to procure any policy of insurance.”3 Section 2–2201(a) of the Illinois Code of Civil Procedure places a duty on insurance producers, including brokers and agents, to act with ordinary care in procuring insurance for insureds.4
Continue Reading When Must a Negligence Claim Be Brought Against an Illinois Insurance Producer?

The appraisal clause in a typical residential and commercial property insurance policy provides for an appraisal if the parties disagree as to “the amount of loss.”1 That phrase has been the subject of extensive legal debate between insureds and insurers in terms of its meaning and scope. While most courts have concluded that ascertaining the amount of loss does not include interpreting the policy or making coverage determinations, little guidance has been provided as to what coverage means and whether an appraisal can still proceed even if coverage issues exist.
Continue Reading The Scope of Appraisal in Illinois

Often an insurer will assert that their payment of an appraisal award has satisfied their obligation under the policy such that an action for “bad faith” cannot be brought. An insurer recently raised this issue in a motion to dismiss against our client arguing that the insured’s right to bring a claim for damages under section 155 of the Illinois Insurance Code for the insurer’s vexatious and unreasonable conduct was foreclosed by its payment of the appraisal award. In researching this issue in Illinois, it became clear that an insured may state a valid section 155 claim even when the disputed amount is paid in full prior to the commencement of litigation.1
Continue Reading Payment of an Appraisal Award Does Not Foreclose Insured’s Claim for Vexatious and Unreasonable Conduct in Illinois

In August, I wrote a blog post about an insurer who had violated section 143.17a(a) of the Illinois Insurance Code by failing to provide adequate notice of their intention to non-renew a policy. As a result of its failure to timely provide notice of the intent to non-renew, the insurer was required to renew the expiring policy under the same terms and conditions for an additional year. Two days after issuing the renewal policy, the insurer issued a Notice of Cancellation citing the reason for the cancellation as “Underwriting Reasons: Measurable increase in risk.” This notice provided more than 60 days’ notice.
Continue Reading “Measurable Increase in Risk” Is Not Specific Enough Reason for Policy Cancellation

A federal District Court in Illinois has determined that the term “commencing” is ambiguous in a property insurance policy that provides coverage for “loss or damage commencing [d]uring the policy period…[w]ithin the…United States of America.”1

At issue in Temperature Service Company, Inc. v. Acuity, was whether property damage, that began before the policy period, but continued on and after the policy period “commenced”, was covered under the first party property insurance policy issued by Acuity.
 


Continue Reading “Commencing” Deemed Ambiguous in Property Insurance Policy