Illinois Insurance Coverage Law : Illinois Insurance Lawyer & Attorney : Daniel G. Wills : Swanson Martin & Bell Law Firm : Chicago Marine & General Liability Insurance

In Zdeb v. Allstate Ins. Co. (Ill. App., First Dist., no. 1-09-2774, 9-17-10), Zdeb's auto policy with Allstate provided $100,000 in UIM coverage and $50,000 in MP coverage. The policy allowed a setoff for medical payments. Zdeb was injured in an auto accident and had damages above the UIM limit. The at-fault driver paid his $50,000 limit.

When Allstate paid Zdeb only $38,952.53 ($50,000 less $11,047.47 in medical payments), she sued, claiming that to allow a setoff where there is no double recovery violates public policy. The appellate found the MP setoff to be consistent with the underinsured motorist statute, 215 ILCS 5/143-2(4), the purpose of which is to "place the insured in the same position he would have occupied if injured by a motorist who carried liability insurance in the same amount as his [UIM coverage]. The court thus affirmed the circuit court's grant of summary judgment to Allstate.

• Email This
• Print
• Comments
• Trackbacks

Or one of the best. Insurance blogs. In the U.S. But you get the point. Check out Lexis-Nexis for many worthwhile insurance blogs.

• Email This
• Print
• Comments
• Trackbacks

In Mid-Century Ins. Co. v. Founders Ins. Co. (Ill.App., First District, No. 1-09-1858, 9-24-10), the court rejected Founders' claim for equitable contribution from Mid-Century for an accident where both policies covered the vehicle at issue because a mutual mistake of fact obviated coverage under Mid-Century's policy. 

On February 23, 2005, Bryan Berry, while driving his Chevy Cavalier, hit a pedestrian, who sued him. Berry had insured the Cavalier and his Dodge Durango with Mid-Century but let the policy lapse on the Cavalier and insured it with Founders before the accident. Mid-Century had accordingly canceled the policy for the Cavalier and issued an insurance card listing the Durango as the covered vehicle. However, the policy Mid-Century issued listed the Cavalier as the covered vehicle.

Founders settled the tort case for $100,000 and sought equitable contribution of $50,000 from Mid-Century. The circuit court granted Founders summary judgment in the ensuing declaratory action.

Although both carriers assumed throughout the litigation that the Mid-Century policy covered the Cavalier, and argued instead whether the automatic termination provision in the Mid-Century policy applied and whether notice to Mid-Century was timely,  the appellate court exercised its right to decide a case on grounds not raised by the parties and reversed.

More specifically, the court noted that Berry intended to let coverage for the Cavalier lapse with Mid-Century and in any case would not pay two premiums for the same coverage. Mid-Century, which issued an insurance card on the Durango, intended to cancel coverage for the Cavalier. Because the parties reached a good faith agreement that was erroneously not expressed in their written agreement, there was a mutual mistake of fact, and the parties' actual intent would prevail.

Thus, Founders could not stand in Berry's shoes to enforce the Mid-Century policy as written, and Mid-Century won for reasons it never argued. Which of course raises the question of whether the appellate court should have ruled on a basis neither party raised. As the court noted, it should not address an unbriefed issue if doing so would transform it from jurist to advocate. Here, I think the court acted properly. Berry did not participate in the appeal, where he might have raised the issue. Also, the court sought supplemental briefs on the issue, but apparently neither party addressed it.

• Email This
• Print
• Comments
• Trackbacks

In West American Ins. Co. v. Yorkville National Bank  (docket no. 108285, 9-25-10), the Illinois supreme court, after "considering all relevant factors,"  reversed the appellate court and held that written notice to the carrier 27 months after the underlying lawsuit was filed was reasonable.

On September 24, 2001, Sheryl Kuzma sued Yorkville in Will County for defamation. Yorkville did not provide written notice to its GL carrier, West American, until January 19, 2004. In response to West American's declaratory complaint alleging late notice, Yorkville claimed that West American received oral notice on "several occasions" before then, which amounted to "actual notice."  

More specifically, James Liggett, Yorkville's president, claimed that in late 2001 or early 2002 he advised  Richard Dickson from Yorkville's insurance agency, which was West American's agent, that Yorkville  was involved in a defamation lawsuit and was told that the West American policy would probably not apply. The lawsuit was also discussed at Yorkville's board meetings. Dickson was present as a board member.

The trial court entered judgment for Yorkville, for stipulated damages of $1, 982,778.78,  finding that West American had actual notice of Kuzma's lawsuit from the conversation and board meetings with Dickson and that the 2004 written notice was reasonable. The appellate court (388 Ill.App.3d 769)  reversed, finding actual notice irrelevant and written notice unreasonable under the policy.

The supreme court framed the issue as whether Yorkville provided written notice within a reasonable time. It stated that the factors to be considered included 1. the policy language, 2. the insured's sophistication, 3. the insured's awareness of an event that could trigger coverage, 4. the insured's diligence in determining whether coverage might be available, and 5. prejudice to the insurer. The court found that  the second and third factors favored West American. The court disregarded the first factor because the notice condition did not specify a time for giving notice. 

Regarding the fourth factor, the court stated that "an insured's reasonable belief of noncoverage under a policy may be an acceptable excuse for the failure to give timely notice, even where the delay is lengthy." In support the court cited cases where the insureds were young adults or homeowners.

Finally, regarding prejudice, the court stated that "actual notice to an insurer is relevant to whether the insurer has been prejudiced by a delay in receiving written notice as specified in the policy," and an insurer has actual notice of a lawsuit where "it has sufficient information to locate and defend the suit," citing Cincinnati Ins. Co. v. West American Ins. Co., 183 Ill.2d 317 (1998). Because West American, through alleged oral statements made to its agent, knew that a potentially covered suit had been filed against its insured, it suffered no prejudice.

The court held that Yorkville's written notice was given in a reasonable time and did not violate the policy's notice provision.   

In his dissent, Justice Freeman noted first that the court, by focusing on the Livorsi factors only, ignored the policy language, pursuant to which Yorkville breached every notice requirement. The result, he predicted, will be increased litigation and "swearing contests" between insureds and insurers as to whether and when notice was given. Second, by extending actual notice the court effectively wrote out of insurance policies conditions precedent to coverage.As they say, read the whole thing. 

• Email This
• Print
• Comments
• Trackbacks

For a sober analysis of the likely effects of the health care legislation, including the costs and mandates that will work to squeeze insurers, see this article.

• Email This
• Print
• Comments
• Trackbacks

In Auto-Owners Ins. Co. v. Munroe, (7th Cir., no. 09-3427, 7-22-10), the court held that a $1 million policy limit applied even though three insured vehicles caused the accident.

Munroe sufferred serious injury on November 6, 2006, when he tried to pass one truck, struck the rear of a second truck, then collided head on with a third truck. the three trucks, traveling in a convoy, were owned by Wayne Wilkens Trucking. Wilkins and the trucks were insured by Auto-Owners, which provided coverage of $1 million per occurrence and aggregate.

The Munroes sued, alleging negligence against each driver and Wilkens. They settled for policy limits (less a PD payment), with their claim that policy limits were more than $1 million left for a  declaratory action. The district court granted Auto-Owners summary judgment in that action, finding that coverage was limited to $1 million per occurrence. 

On appeal the Munroes argued that the policy provided $3 million in coverage (three occurrences or $1 million per vehicle). The court rejected the claim for $1 million per vehicle because the policy limited coverage to $1 million regardless of how many persons a claim was made against (severability clause) or the number of vehicles scheduled or involved in the accident (combined limit of liability provision).

Regarding the number of occurrences, the court, citing Nicor, Inc. v. Associated Elec. & Gas, 223 Ill.2d 407 (2006), noted that Illinois applies the cause theory, which presupposes multiple discrete events and asks whether the events had a common cause. In finding only one occurrence, the court distinguished Illinois Nat'l Ins. Co. v. Szczepkowicz, 542 N.E.2d 90 (1989), where the insured truck was struck by a vehicle, moved forward to free a lane, and was struck by a second vehicle five minutes later. Because the two collisions there were not the result of a "single force, nor an unbroken or uninterupted continuum that...caused multiple injuries," there were seperate causes and thus seperate applicable insurance limits.

Here, there was a "single force" and thus a single continuous occurrence. Even if there were seperate causes, then, because they occurred after the single force was set in motion, they were not intervening causes. 

In Addison Insurance Co v. Fay, 232 Ill.2d 446 (2009), the court applied a "space and time" test to determine the number of occurrences, stating that it applied to omissions as opposed to affirmative acts of negligence. It seems that without stating as much the Munroe court applied the "space and time" test to "affirmative acts of negligence" as a "continuous occurrence" is simply one lacking  separation in space or time.  

• Email This
• Print
• Comments
• Trackbacks

The Volokh Conspiracy has a good discussion of Kelo five years on. In that case, the U.S. Supreme Court, in a 5-4 decision, held that the government can condemn (take) private property for "economic development." In other words, whenever it feels like it.

• Email This
• Print
• Comments
• Trackbacks

The Insurance Claims and Bad Faith blog discusses a Florida district court case finding that evidence of how the insurer handled similar claims is discoverable only where bad faith is alleged. The case at issue, DeSoto Health & Rehab, LLC v. Philadelphia Indem. Ins. Co., alleged only breach of contract.

• Email This
• Print
• Comments
• Trackbacks

The National Insurance Law Forum discusses a Washington supreme court case holding that an insurer that denied a defense under an assault and battery exclusion for post-assault negligence acted in bad faith by relying upon a split in authority to do so.

• Email This
• Print
• Comments
• Trackbacks