Insurance Law

Declaratory judgment action as to whether insurer has a duty to defend its insured in underlying tort lawsuit in which claims for negligence and battery were alleged.  Six months after tort suit filed, Defendant was convicted of aggravated battery stemming from same events. Insurer initially owed duty to defend insured in underlying tort case, which arose when Plaintiff filed underlying tort case, rather than when Defendant filed affirmative defense of self-defense. Insurer's duty to defend terminated upon insured's conviction for aggravated battery, because, as of that moment, insured's conduct fit with policy's criminal-act exclusion. (HOWSE and COBBS, concurring.)

Insurer filed declaratory judgment action asserting the insured, a company charged with sending "blast fax", and its assignee (company which was class action plaintiff) were not entitled to be indemnified under policy. Parties to underlying class action suit had settled for $4 million, although insurer was not a party to settlement and had opposed previous settlement offer. Policy explicitly states that property damage and advertising injury deductible apply respectively per claim due to any one occurrence or due to any one injury.Policy's advertising injury deductible provision and use of the word "claim" are not ambiguous. Thus, coverage for property damages and advertising injury is possible on a per claim basis and with the deductible applying. As deductible is above the $1 million advertising injury limit, insurer is not obligated to indemnify insured or assignee for costs of settlement. Policy exclusion prohibits penalties and damages that are a multiple of compensatory damages, and prejudgment interest. (MASON and FITZGERALD SMITH, concurring.)

Plaintiffs filed suit against their insurer, alleging vexatious breach of contract and common law fraud, under Section 155 of Insurance Code, in handling of their homeowners' insurance claim for fire loss 5 days after they purchased homeowners' policy. When determining whether an insurer's conduct is vexatious and unreasonable under totality of circumstances, a court may properly consider actions identified as improper claims practices under Section 154.6 of Insurance Code as relevant to, but not dispositive of, a Section 155 claim. Appellate court overrules certain of insurer's objections to interrogatories, and sustains others.(WELCH and GOLDENHERSH, concurring.)

Defendant insurer waived its policy defenses for uninsured motorist coverage, by extending coverage to couple and their minor son, who were in car accident with uninsured motorist. Record clearly shows that Defendant insurer told couple that it was "granting coverage" under its policy. Defendant insurer never told couple that, although it was not liable under the policy, it was willing to nevertheless settle their claims to avoid further dispute.  The grant of coverage transformed defendant insurer's conduct unambiguously into a waiver of its policy defenses.(SCHOSTOK and ZENOFF, concurring.)

Court erred in finding Illinois Municipal League Risk Management Association had no duty to defend or indemnify City in underlying suit filed against it by Regional Transportation Authority (RTA). RTA alleged its claim against City arose from a "tax kickback scheme" between City and Oil Company, seeking statutory remedies per Section 8-11-21 of Municipal Code and damages and equitable relief, seeking compensation by City for sales tax proceeds it claims it should have received but were never collected by Oil Company. Policy exclusion for the issuance, collection, or management of tax proceeds  does not apply, as RTA is asking City to make RTA whole for taxes never collected by Company. (HARRIS and APPLETON, concurring.)

Plumbing company, which was hired by cement company to install a trash pump, obtained insurance policy from Plaintiff insurer, which listed cement company as an  additional insured for any vicarious liability attrributable to cement company due to plumbing company's negligence. Court properly found that Plaintiff insurer had no duty to defend cement company as an additional insured in negligence action filed by plumbing company's employee, because underlying suit alleged only direct negligence by cement company, and did not allege any negligent act by plumbing company.  Court properly refused to consider cement company's third-party complaint to create a duty for insurer to defend it based on vicarious liability. (CARTER and HOLDRIDGE, concurring.)

Plaintiff foundations filed suit against their former insurance broker for loss of defense coverage under foundations' D&O liability insurance policy.  Court erred in interpreting exclusion by failing to see it as ambiguous. Clause "any other provision. . . used to impose liability" is ambiguous, as it is susceptible to more than one reasonable interpretation. Thus, clause to be strictly construed against the insurer, and narrow construction of clause is the most plausible.(JORGENSEN and HUDSON, concurring.)