Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: Illinois

Obligation to Timely Report Claim Applies Even if Claim Appears to Have Been Abandoned

Posted in Late Notice, Related Claims and associated exclusions
Applying Illinois Law, the United States District Court for the Northern District of Illinois has held that an insurer had no duty to defend a claim reported more than nine months after the end of the policy period.  Wesco Ins. Co. v. Elements Architectural Grp., Inc., 2019 WL 5725440 (N.D. Ill. Nov. 5, 2019).… Continue Reading

Ill. Ruling Clarifies Wrongful Incarceration Insurance Triggers

Posted in Wrongful Conviction
This article was originally published in Law360.  In Sanders v. Illinois Union Insurance Company, the Supreme Court of the State of Illinois resolved a split in state and federal decisions applying Illinois law on trigger of coverage in the context of wrongful incarceration.[1] According to the Illinois Supreme Court, the City of Chicago Heights’ insurers had… Continue Reading

Exclusion for Violation of Consumer Protection Laws Does Not Bar Coverage for Alleged Violation of Landlord-Tenant Law

Posted in Consumer Protection Exclusion
An Illinois intermediate appellate court has held that an exclusion for claims arising from “unfair or deceptive business practices” including “violations of any local, state or federal consumer protection laws” did not bar coverage against an insured property manager for alleged violations of a city residential landlord-tenant ordinance.  Evergreen Real Estate Servs., LLC v. Hanover… Continue Reading

Coverage for Lawsuit Against School District Involving Student’s Acts of Sexual Misconduct Not Barred by Sexual Misconduct Exclusion

Posted in Uncategorized
Applying Illinois law, a federal district court has held that a policy’s sexual misconduct exclusion did not apply to preclude coverage for an underlying lawsuit against a school district involving a student’s acts of sexual misconduct, where the applicability of the exclusion in that context was not “clear and free from doubt.”  Netherlands Ins. Co.… Continue Reading

Availability of Information Regarding Ongoing Lawsuit Does Not Preclude Exclusions for Prior Acts or Pending Litigation

Posted in Professional Services, Related Claims and associated exclusions
The United States District Court for the Northern District of Illinois, applying Illinois law, has held that there is no coverage under a professional liability policy where the claim arose out of the same set of facts upon which a separate lawsuit against the insured was filed before the policy incepted.  Arch Ins. Co. v.… Continue Reading

Excess Carrier Not Entitled to Compel Production of Insured’s Settlement Agreement with Underlying Carriers

Posted in Cooperation, Excess insurance/exhaustion
Applying Illinois law, a federal district court has held that a cooperation clause in an excess insurer’s policy did not entitle the excess insurer to compel production of the insured’s settlement agreement with a primary carrier.  Homeland Ins. Co. of N.Y. v. Health Care Serv. Corp., 2019 WL 1499300 (N.D. Ill. Apr. 3, 2019).… Continue Reading

Ten Lawsuits Alleging Mishandling or Sale of Human Body Parts Constitute a Single “Claim”

Posted in Related Claims and associated exclusions
Applying Illinois law, a federal district court has held that ten lawsuits against an anatomical donation company for alleged mishandling and sale of human body parts are “related” and constitute a single “Claim” under a professional liability policy.  Lloyd’s Syndicate 3624 v. Biological Res. Ctr. of Ill., LLC, 2018 WL 4489589 (N.D. Ill. Sept. 19,… Continue Reading

Resident’s Three Claims Against Condo Association Spanning Multiple Years Deemed Single Claim Subject to Single Limit

Posted in Related Claims and associated exclusions, Wrongful Act
The United States District Court for the Northern District of Illinois has held that three claims brought by a resident against a condominium owners’ association for alleged discrimination and retaliation involved related wrongful acts and therefore are properly treated as a single Claim deemed first made during the claims-made policy period when the first such… Continue Reading

No Duty to Defend Under Claims-Made-and-Reported Policy Where Notice of Claim Given Nine Months After Cancellation

Posted in “Claim”, Notice of Claim
An Illinois appellate court has held that a trial court properly awarded judgment to an insurer because it had no duty to defend or indemnify its insured under its claims-made-and-reported policy where notice of the underlying negligence lawsuit came in more than nine months after the policy was cancelled.  Southwest Disabilities Services and Support v.… Continue Reading

Court Holds that Government-Issued Subpoena Constitutes a Claim

Posted in “Claim”, Excess insurance/exhaustion
The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a government-issued subpoena constituted a Claim under the directors and officers liability policies at issue, thus allowing a company’s coverage action to proceed against its primary and excess insurers.  Astellas US Holding, Inc. v. Starr Indem. & Liab.… Continue Reading

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