Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: Illinois

Insurer May Not Rescind Renewal Policy Based on Misrepresentations in Prior Policy’s Application

Posted in Loss, Prior Knowledge/Warranty Exclusion, Rescission
An Illinois intermediate appellate court, applying Illinois law, has held that a renewal insurance policy may only be rescinded based on material misrepresentations made in the renewal application, and not based on misrepresentations made in applications for prior policies.  Ill. State Bar Ass’n Mut. Ins. Co. v. Rex Carr Law Firm, 2017 WL 2806126 (Ill.… Continue Reading

No E&O Coverage Where Insured Failed to Report Claim During Policy Period When It Was First Made

Posted in “Claim”, Notice of Claim
The Appellate Court of Illinois, applying Illinois law, has held that an insurer has no duty to defend or indemnify an insurance agent under an errors and omissions liability policy where the agent failed to provide notice of the claim during the policy period in which the claim was first made.  James River Ins. Co.… Continue Reading

Insurer Not Estopped from Asserting Policy Defenses Where Insured Had Duty to Defend; Insured-v.-Insured Exclusion Does Not Bar Coverage for Claims by Former Shareholders

Posted in “Claim”, Insured v. Insured Exclusion, Related Claims and associated exclusions
An Illinois federal court, applying Illinois law, has held that an insurer who declined to advance defense costs was not estopped from asserting policy defenses in a coverage action later filed by the policyholder corporation.  Vita Food Prods., Inc. v. Navigators Ins. Co., 2017 WL 2404981 (N.D. Ill. June 2, 2017).  The court also held… Continue Reading

Failure to Defend and Bring Timely Coverage Action Precludes Insurer from Raising Policy Defenses Under Illinois Law

Posted in Defense Costs, Dishonesty Exclusion, Prior Knowledge/Warranty Exclusion
Applying Illinois law, the United States Court of Appeals for the Seventh Circuit has held that an insurer who initially refused to defend its insured and waited five years to bring an action for declaratory relief was precluded from raising policy defenses to indemnity.  Title Indus. Assurance Co. v. First American Title Ins. Co., 2017… Continue Reading

Explicit Allegation of Acts Arising from Professional Services Required to Trigger E&O Policy

Posted in Professional Services
Applying Illinois law, the United States Court of Appeals for the Seventh Circuit has held that a lawsuit that mentioned that the insured provided professional services to the claimant, but did not directly assert that any of the wrongdoing in the complaint arose from those services, was not a covered claim under a real estate… Continue Reading

Underlying Insurer’s Agreement to Pay Limits Does Not Trigger Exhaustion for Excess Policy Requiring “Actual Payment”

Posted in Excess insurance/exhaustion
An Illinois intermediate appellate court has held that excess insurance policies requiring “actual payment” by an underlying insurer for exhaustion purposes were not triggered where the insurer “pledged” its policy as collateral and agreed to advance defense costs until its policy was exhausted but did not make “actual payment” in legal currency. Ritchie v. Arch… Continue Reading

Insurer Entitled to Rescind Lawyers Professional Liability Policy Where Insured Made Material Misrepresentations in Application

Posted in Rescission, Rescission-Materiality, Rescission-Waiver
The U.S. District Court for the Southern District of Illinois, applying Illinois law, has held that an insurer was entitled to rescission of a policy where the insured made material misrepresentations in its application.  Carolina Cas. Ins. Co. v. Robert S. Forbes PC, 2017 WL 86136 (S.D. Ill. Jan. 10, 2017).  The court also held that… Continue Reading

Insurer Has No Duty to Defend Claim Seeking Restitution and Other Unspecified Relief

Posted in Loss, Personal Profit/Advantage exclusion, Wrongful Act
An Illinois federal district court has held that a lawsuit seeking to recover amounts an insured wrongfully refused to pay to another sought only uninsurable restitutionary-type relief, not “Damages,” and thus did not trigger an insurer’s defense obligations under an E&O policy.  Westport Ins. Corp. v. M.L. Sullivan Ins. Agency, Inc., 2017 WL 56635 (N.D.… Continue Reading

Court Finds EEOC Charge and Subsequent Lawsuit to Be Two Separate Claims Under Claims-Made Policy

Posted in “Claim”, Related Claims and associated exclusions
The United States District Court for the Northern District of Illinois, applying federal and Illinois law, has found that an employment discrimination lawsuit was “first made” within a professional liability policy’s policy period despite the fact that the lawsuit’s required precursor, an Equal Employment Opportunity Commission (EEOC) charge, was filed before the policy period.  John… Continue Reading

Certain Extrinsic Evidence Permissible for Purposes of Establishing No Duty to Defend Under Illinois Law

Posted in Defense Costs
The United States Court of Appeals for the Seventh Circuit, applying Illinois law, has held that extrinsic evidence that does not decide an “ultimate issue” in the underlying claim may be admitted in a declaratory judgment action for purposes of establishing that an insurer has no duty to defend.  Landmark Am. Ins. Co. v. Hilger,… Continue Reading

Lawyer’s Material Misrepresentations in Policy Renewal Applications Justify Rescission

Posted in Notice of Potential Claim (Timeliness), Rescission
A federal district court in Illinois has granted an insurer’s motion for summary judgment rescinding three consecutive professional liability policies.  This comes after the court determined under Illinois law that the insured attorney made material misrepresentations in each of the renewal applications.  Minn. Lawyers Mut. Ins. Co. v. Schulman, 2016 WL 4988006 (N.D. Ill. Sept.… Continue Reading

Attorney’s Reporting of Alleged Ethics Violations Not “Professional Services”; Eight-Month Delay in Providing Notice Precludes Coverage as a Matter of Law

Posted in Notice of Claim
An Illinois federal district court has granted a commercial general liability insurer’s motion for summary judgment that it had no duty to defend or indemnify an insured law firm or its principals in a defamation action based on the insureds’ failure to comply with the notice provisions in the policy. Sentinel Ins. Co., Ltd. v.… Continue Reading

Federal Appellate Court Declares “Language of the Policy is King” in Affirming Application of Contract Exclusion

Posted in Breach of Contract, Breach of Contract – coverage for amounts due pursuant to contract, exclusions
The United States Court of Appeals for the Seventh Circuit has affirmed a trial court’s ruling that, under Illinois law, a contract exclusion applied to preclude coverage for a claim stemming from an insured’s failure to pay its contractor because all of the claimant’s causes of action arose from its contract with the insured. Altom… Continue Reading

Due to Lack of Notice, E&O Carrier Has No Duty to Indemnify Insured Auto Insurer’s Settlement Payment Stemming from Bad Faith Claim

Posted in “Claim”, Consent to settle/incur defense costs, Notice of Claim
An Illinois federal court, applying Illinois law, has ruled that, due to lack of proper notice, an E&O insurer had no duty to indemnify its insured auto insurance company’s $7 million settlement payment stemming from a bad faith claim in an underlying auto accident lawsuit. Lexington Ins. Co. v. Horace Mann Ins. Co., 2016 WL… Continue Reading

Legal Fees Exclusion Bars Coverage for Arbitration Award that “In Substance” Reduced Fees Owed to Insured Law Firm

Posted in Other: “Legal Fees” Exclusion
The United States Court of Appeals for the Seventh Circuit, applying Illinois law, has held that an exclusion barring coverage for “claim[s] for legal fees, costs or disbursements paid or owed to you” applies to bar coverage for an arbitration award adjusting the amount of attorneys’ fees owed to an insured law firm. Edward T.… Continue Reading

Seventh Circuit Holds Insured’s Material Misrepresentations in Application Warrant Rescission of Policy

Posted in Rescission
Applying Illinois law, the United States Court of Appeals for the Seventh Circuit has held that a medical service provider’s material misrepresentations regarding its use of non-traditional and experimental weight loss drugs and procedures warranted rescission of its professional liability coverage. Essex Ins. Co. v. Galilee Med. Cntr.¸ 2016 WL 851688 (7th Cir. Feb. 10,… Continue Reading