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

Motions in limine are commonly used to seek a pre-trial ruling regarding excluding inadmissible or prejudicial evidence. At the federal level, Federal Rules of Evidence (“FRE”) 103(d) and 104(c),1 402,2 403,3 and 611(a)4 and Federal Rule of Civil Procedure (“FRCP”) 16(c)5 provide the underlying bases for in limine motions, though the power to rule on such motions inheres in the district court’s authority to manage the course of trials.6 Whether to grant or to deny a motion in limine falls within the broad discretion of the district court.7

The admissibility of evidence of an insured’s prior fires and prior insurance claims was the subject of a motion in limine in Chicago Import, Inc. v. American States Insurance Company,8 a case arising out of a 2007 warehouse fire alleged to have been an act of arson.

Continue Reading Using a Motion in Limine to Exclude Evidence of Prior Fires or Prior Insurance Claims

All too often following a loss, insureds are a faced with another shock when they open their mail and find a notification that the insurance company is not renewing their policy at the end of their existing policy term. Recently my colleague Edward Eshoo and I represented a policyholder facing this very situation. The insured was already fighting the insurance company for benefits under the policy and now in the midst of a loss was being told that at the end of the current policy period the insurance company would not be renewing the policy. While insurance companies have the right to non-renew or cancel coverage, there are strict requirements governing when how and when they may do so.

Continue Reading Insurer’s Non-Renewal Notification: Too Little, Too Late

Homeowner and commercial property insurance policies typically limit an insured’s recovery to actual cash value1 benefits unless and until the damaged or destroyed property is repaired or replaced. This limitation becomes an issue if coverage is declined and the insurer fails to pay actual cash value benefits as “seed money” to start the repair/replacement process. Under that scenario, can an insured still recover replacement cost benefits if it proves at trial the insurer’s action in denying coverage and in failing to pay the actual cash value of the loss prevented or hindered it from fulfilling the repair/replacement condition?

Continue Reading Illinois Courts Follow the “Prevention of Performance” Doctrine