Insurance Law

Breach of insurance cooperation clause is a valid defense which is "other affirmative matter" barring a claim per Section 2-619(a)(9) of Code of Civil Procedure. Insured filed a claim with insurer that his motorcycle, customized for over $60,000, had been stolen. Court properly granted insurer's motion to dismiss based on policy's cooperation clause, relying on its adjustor's affidavit that insured failed to respond to insurer's request for statement under oath and for financial status documents and credit report authorization, to determine whether financial motive to file false claim. Insurer presented adequate proof of substantial prejudice by insured's negligible cooperation and by insurer being thereby hampered in its defense. Documents incorporated into affidavit were not hearsay, as they were offered to show notice rather than for truth of matter asserted. FITZGERALD SMITH and HOWSE, concurring.)

Court properly granted summary judgment to insurer on its claim that its insured driver, who was in a two-car collision, breached assistance and cooperation clause of his policy, and thus insurer was relieved of any duty to defend or indemnify driver from litigation and $11,000 judgment. Insurer used reasonable efforts and diligence in its search for insured; it had sent letter inquiry to his son who denied contact with him for more than a decade and speculated that he might be in jail. Insurer used sources likely to disclose his whereabouts, its search was sufficiently broad and produced leads which it then pursued and exhausted. Insurer's defense was plainly and substantially prejudiced by the absence of insured, who was the only known witness to the collision. (CAHILL and R. GORDON, concurring.)

Court properly dismissed insurer's suit in equitable subrogation action against builder and architect for water damage to insured's residence, as its homeowner's policy contains express provision for subrogation, and contract terms, rather than common law or equitable principles control. Insurer failed to perfect its rights of subrogation under the terms of the policy by failing to have insured assign his rights of recovery to insurer. (HALL and LAMPKIN, concurring.)

Insurance policy mistakenly listed Cavalier car, although insurer and insured both intended for a different car, a Dodge Durango, to be listed and insured. Equitable contribution cannot be imposed on insurer because the insurance contract between the insureds and insurer did not provide coverage for the Cavalier at the time of accident in which insured was driving the Cavalier. Prior to accident, the insureds had obtained insurance on the Cavalier through a different insurer. Equitable contribution inapplicable because the two policies at issue did not cover the same property owned by the insureds, and the mutual mistake of fact does not give other insurer the right to stand in the shoes of insured to seek enforcement of policy. (McBRIDE and R. GORDON, concurring.)

Plaintiff pedestrian was on a public sidewalk when struck by vehicle, and then filed declaratory judgment action seeking determination that insurer was not entitled to a setoff on underinsured motorist coverage with monies paid to her for automobile medical payments coverage. The policy unambiguously permitted the setoff. Double recovery from two or more tortfeasors is not at issue; and setoff provision in policy is in accordance with public policy behind underinsured motorist statute, to fill gap between amount recovered from underinsured driver's insurance and the amount of coverage provided in insured policy. The setoff provision in this policy did not nullify plaintiff's UIM coverage or MP coverage. (J. GORDON and McBRIDE, concurring.)

Bank settled defamation suit for $1.75 million, but CGL insurer denied coverage on basis of untimely notice of suit by bank to insurer. Under the circumstances, bank's written notice of the suit to its insurer was within a reasonable time and did not violate notice provision in policy. Bank president mentioned suit in passing to insurance agent who had placed the policy for the bank, and suit was discussed during several bank board meetings when insurance agent, who was a member of bank's board, was present. These events placed insurer on notice that bank was a defendant in a suit that was potentially covered under the policy, as insurer had sufficient information to "locate and defend" the defamation suit. (FITZGERALD, THOMAS, KILBRIDE, GARMAN, and KARMEIER, concurring.)

Insureds filed declaratory judgment action for coverage for injuries sustained in auto accident while insured was a passenger in vehicle driven by another person, whose policy limits were exhausted. Court properly granted summary judgment for insurer, as policy had expired prior to date of accident, and insured failed to pay premium until nine days past the 20-day grace period. Facts support expiration of policy rather than cancellation; thus, whether cancellation notice and extended renewal provisions of policy were ambiguous is inapplicable. Court properly denied insurer's motion for sanctions, as insureds' claims set forth a coverage argument which was not unreasonable. (HOLDRIDGE and McDADE, concurring.)