Insurance Law

In a declaratory judgment action, the plaintiff insurance company sought a declaration that the amount of uninsured motorist bodily injury coverage limit in its policy should be reduced by the amount that was paid to the insured’s medical providers by the insured’s employer. The trial court granted summary judgment in favor of the insured and the policy holder appealed. The appellate court affirmed, finding that the insurer was entitled to a setoff for the payments under section 22-306 of the Pension Code. (LAVIN, concurring and PUCINSKI, dissenting)

The Illinois Supreme Court considered whether the plaintiff, a mutual insurance company, had a duty to defend the defendant, an additional insured, under a subcontractor’s commercial general liability policy in connection with an underlying lawsuit brought by a townhome owners’ association for breach of contract and breach of implied warranty of habitability. The supreme court found that the allegations contained in the underlying lawsuit sufficiently fell within the initial grant of coverage requirement that there be “property damage” caused by an “occurrence” and affirmed the judgment of the appellate court which reversed a trial court order in favor of the insurance company. However, the supreme court remanded for a determination of whether any exclusions contained in the policy would bar coverage. (NEVILLE, OVERSTREET, HOLDER WHITE, CUNNINGHAM, ROCHFORD, and O’BRIEN, concurring)

In an insurance coverage matter arising out of an incident where a minor was struck by a vehicle while riding his bicycle, the Illinois Supreme Court considered whether a provision in an automobile insurance policy that limited uninsured motorist coverage to insureds occupying an “insured automobile” violated section 143a of the Illinois Insurance Code. The court concluded that it did and that the language of section 143a of the Insurance Code encompassed a bicyclist injured by an uninsured motorist because the cyclist is a “person” who suffered injuries “arising out of the ownership, maintenance, or use of a motor vehicle.” As such, the court concluded that the injured person’s status as an occupant of a vehicle was irrelevant and the insurance policy was unenforceable as a matter of public policy. (THEIS, NEVILLE, OVERSTREET, CUNNINGHAM, ROCHFORD, and O’BRIEN, concurring)

Appeal involving an insurance coverage dispute where the plaintiffs sought a determination that they were an “additional insurance” on a policy held by a company they had contracted with to do work on the plaintiff’s property. The trial court entered summary judgment in favor of the insurance company, finding that the plaintiff was not an additional insured. The appellate court affirmed, finding that the plaintiff was not an additional insured because there was no written agreement between the two companies that required the plaintiff to be named as an additional insured. (LAMPKIN and NAVARRO, concurring)

Plaintiff, an insurance company, paid a claim to its insured for damage caused to a building during a construction project and then filed a lawsuit against a subcontractor alleging that the subcontractor was the cause of the water damage. The trial court granted defendant’s motion for summary judgment by finding that the plaintiff was not entitled to subrogate for the building owner. Plaintiff appealed and the appellate court reversed and remanded, finding that the requirements set forth in the insurance policy controlled the plaintiff’s right to subrogation and that it had established a right to subrogation pursuant to those terms. (McBRIDE and ELLIS, concurring)

In an underlying matter a group of condominium unit owners sued their condominium association and its directors after their building was destroyed by a fire, alleging that the association and its directors breached their fiduciary duty when they failed to purchase enough insurance to cover replacement costs and mismanaged the reconstruction process. The plaintiff, the insurance company of the association and its directors, filed a declaratory judgment action seeking a declaration that it had no duty to defend in the underlying matter. The trial court entered judgment in favor of the insurance company and the insured appealed. The appellate court reversed and remanded, finding that the trial court erred in holding that a provision of the insurance contract that barred covered for an insured’s failure to “establish or maintain adequate reserves,” barred coverage. (JOHNSON and TAILOR, concurring)

The State of Illinois filed a lawsuit against the defendant in connection with allegedly improper operation of a cooling water intake structure at a property owned by the defendant. Defendant’s insurers filed a declaratory judgment action seeking a declaration that they owned no duty to defend the defendant in connection with the underlying lawsuit, the circuit court found in favor of the insurers, and defendant appealed. The appellate court affirmed, concluding that the conduct alleged in the underlying complaint did not constitute an “occurrence” under the insurance policies. (McBRIDE and D.B. WALKER, concurring)

Plaintiffs filed a lawsuit alleging breach of contract and seeking a declaratory judgment relating to the defendant’s denial of coverage for damages incurred to a building owned by the plaintiffs and insured by the defendant. The trial court granted judgment in favor of the defendant finding that the governmental action exclusion contained in the policy precluded coverage and plaintiffs appealed. The appellate court affirmed, finding that the exclusionary language applied to the claim because plaintiff’s building was damaged by the city-ordered demolition of a neighboring building and the policy excluded both direct and indirect damage caused by government action. (HOLDRIDGE and McDADE, concurring)

Plaintiff brought a declaratory judgment action against its insureds asking the court to declare that it did not have a duty to defend or indemnify the defendant homeowner association against claims made by homeowner association residents in a derivative suit. The trial court granted plaintiff’s motion for judgment on the pleadings finding that res judicata and collateral estoppel barred defendants from seeking defense in the derivative suit where a judgment rendered in a prior case determined that plaintiff had no duty to defend. The appellate court agreed with the reasoning of the trial court and affirmed. (HOLDRIDGE and ALBRECHT, concurring)