Insurance Law

Insurer filed declaratory judgment action as to its coverage; general contracctor had tendered its defense to insurer, which had issued policy to sewer subcontractor which named general contractor as additional insured. Injuries sustained by Commonwealth Edison worker who was injured when he fell into unguarded sewer manhole at home construction site. Sewer subcontractor could be found solely liable to worker for his injuries, and thus any liability attributed to general contractor would arise solely as a result of the acts or omissions of the named insured, and in that case the general contractor would be an additional insured under the terms of the endorsement to the insurance policy. To determine parties' intent, court looked to language of subcontract agreement and insurance policy. (MURPHY and STEELE, concurring.)

Roofing company filed declaratory judgment action, claiming that mandatory arbitration clause its workers' compensation insurer was relying upon was unenforceable due to insurer's conduct at time of contracting. Employer was bound by the program agreements it executed for two policy years, and disputes arising from those policy years are subject to the mandatory arbitration clause. Employer failed to identify material issues as to insurer's alleged deceptive practices or procedural unconscionability. Rating agreements were only six pages long, with arbitration and choice-of-law language prominent. However, as to two other policy years, employer never ratified those program agreements, by refusing to sign them; and both parties consistently demonstrated their understanding that the agreements needed to be signed to become effective; thus, employer was not bound by mandatory arbitration clause of those two policy years. (CAHILL and R.E. GORDON, concurring.)

Court properly determined that insurance policy unambiguously barred stacking or aggregation of UIM coverage because declarations page of insurance policy listed UIM coverage only once, in a single line with a single identification of a single amount of UIM coverage. (GOLDENHERSH and WEXSTTEN, concurring.)

Plaintiff filed suit against his insurer, claiming that it engaged in unauthorized practice of law by employing staff counsel to represent him in an unrelated claim brought against him. Court properly dismissed complaint for failure to state a cause of action. Insurance company has direct pecuniary interest in underlying third-party action against its insured and is thus entitled to have counsel represent its own interests as well as those of its insured, as long as their interests are aligned. Rule 5.4 of Illinois Rules of Professional Conduct does not overrule Section 5 of Illinois Corporation Practice of Law Prohibition Act, which permits insurance companies to employ staff attorneys to represent their insureds. (TOOMIN and HOWSE, concurring.)

Farmers issued auto insurance policy containing UIM provision to stepfather of person woman injured when an underinsured vehicle drove into a Subway restaurant where she was sitting inside; she claimed damages in excess of $900,000. Farmers' UIM policy provision, which allowed it to set off the amounts paid by property owner and the franchisee, would violate Illinois public policy, as it is too broad a provision and is against what the legislature intended to be allowed to be deducted under Illinois Insurance Code. The maximum amount the injured party can recover under UIM coverage is the Farmers $300,000 per person UIM policy limit less the $24,000 paid by the driver's insurer. (GOLDENHERSH and SPOMER, concurring.)

Insured was driving an ATV, on which his son was a passenger, and collided with a motorcycle being driven by insured's other son. Son riding on ATV suffered severed head injuries, 5-day hospitalization, and 3 surgeries. Both vehicles, and another motorcycle, were covered by Progressive policy. Limitation-of-liability provision in policy did not apply to limit injured son's recovery to bodily injury liability limits for only one of the vehicles. Declarations page layout is important in interpreting policy, and is considered in conjunction with general policy language. It is not relevant that language which says that coverage for one vehicle may not be combined with same coverage for another appears on declarations page rather than in body of policy, as this is not a traditional stacking case. (GOLDENHERSH and WEXSTTEN, concurring.)

Hotel guests lost jewelry and cash they placed in a safe in their hotel room, and settled with hotel and its primary and excess insurers for $1 million. Excess carrier and hotel sued primary carrier to recover the amounts they had paid in settlement. Hotel had possessory custody of jewelry and other valuables the guests left in their room, and protection of those valuables forms intrinsic part of hotel's work as innkeeper. Primary insurer provided limited coverage, and paid the limits it was obligated, thus owes no further duty to pay for guests' loss. (O'MARA FROSSARD and O'BRIEN, concurring.)