Insurance Law

Plaintiffs filed a complaint against Defendant, their insurance company, alleging breach of contract in bad faith when Defendant would not pay their claims from an accident involving an uninsured motorist. Plaintiffs then filed a motion for summary judgment which Court granted. On appeal, Defendant argued that Court erred, because the policy required Plaintiffs to unequivocally demand arbitration and appoint an arbitrator within two years of the accident, which Plaintiffs did not do. Court erred in granting Plaintiff’s motion. The arbitration provision in the policy stated that disagreements concerning uninsured motorist coverage and damages “shall be submitted to arbitration” within two years. A party sufficiently commences arbitration if their request for arbitration is unequivocal and made according to the terms of the policy. Plaintiff’s letters stating “[w]e hereby make demand for arbitration if this claim is not resolved within two years after the accident” was a contingent demand, and thus did not commence arbitration.

Insurer filed declaratory judgment action as to its duties to defend and indemnify its insured against a suit filed by Wheaton College. Interlocutory appeal from order denying Defendant's motion to stay action pending resolution of underlying litigation. There is an actual controversy between the parties, because there is a concrete dispute admitting of an immediate and definitive determination of the parties' respective rights. Sanctions and default judgment entered against Defendant in underlying case are interlocutory, so that issue of his liability has not been "settled" or "established"Adjudicating insurer's amended complaint would improperly require trial court to decide issues of ultimate that could bind parties to underlying litigation. Staying all proceedings pending resolution of underlying litigation is appropriate given circumstances of case. (McLAREN and BURKE, concurring.)

Court did not abuse its discretion in staying consideration of coverage issues where its factual determinations in coverage litigation could have an effect on the ultimate facts at issue in the underlying suits. Court did not abuse its discretion in considering whether allegations of underlying complaints set forth facts that arguably fell within the policies' coverage such that it gave rise to a duty to defend. Court did not abuse its discretion in declining to adjudicate coverage issues on 2 underlying suits that had settled. (HALL and LAMPKIN, concurring.)

Plaintiff, while driving a box truck during course and scope of his employment, was seriously injured in auto accident. Option form is not sufficient evidence that Plaintiff's employer effectively rejected the policy's bodily injury liability limits or effectively selected lower underinsured motorist (UIM) limits. Alleged rejection was not initialed by insured as required by preamended version of Section 143a2 of Insurance Code, and was not, per amended version of that Section, a written request for lower UIM coverage made by insured or applicant as required by statute. No arbitration is required as to Plaintiff's UIM motorist claim. Defendant's denial of UIM claim and delay was not vexatious or unreasonable. Box truck was not a "private passenger automobile" within meaning of Section 143.13a of Insurance Code. Thus, step-down limits of policy do not violate Illinois law or public policy. (CHAPMAN and CATES, concurring.)

Insurance coverage dispute involving personal injury action filed against Defendants. Plaintiff insurer filed initial declaratory action seeking declaration that it owed no duty to defend Defendant AAA in underlying PI suit. Another insurer intervened in declaratory action and filed counterclaim seeking declaration that other insurer has a duty to defend  AAA, and that it owed it reimbursement for costs it incurred in defending AAA.  Underlying complaint, when read in conjunction with Plaintiff insurer's claim note and terms of Subcontract, create possibility that  AAA could be found liable for injuries based on named insured's negligence. Thus, Plaintiff insurer's duty to defend AAA under additional insured endorsement was triggered. (GORDON and LAMPKIN, concurring.)

Insurer filed declaratory judgment complaint seeking declaration that insureds were not entitled to coverage. Insureds filed counterclaim against insurer and a 3rd-party complaint against its agent. Defendants' counterclaim and 3rd-party complaint were not time barred, as cause of action accrued upon denial of coverage. When an insurance agent owes a fiduciary duty to an insured, a cause of action for breach of that duty accrues at the time of the breach, but statute of limitations is subject to tolling by application of the discovery rule. Insureds knew or reasonably should have known of their injury on the date when coverage was denied. (FITZGERALD SMITH and LAVIN, concurring.)