Illinois Federal Court Refuses to Extend NY Insurance Law 3420 to Policy Not Issued or Delivered in New York

An Illinois federal district court in Frankenmuth Mutual Insurance Company v. The Hockey Cup, LLC held that an insurer was excused from its defense obligations due to late notice, since the court found that New York Insurance Law Section 3420(a)(5)’s requirement that insurers show prejudice to deny coverage based on late notice did not apply because the policy was not issued or delivered in New York.  The underlying lawsuit, in which the National Hockey League was one of the plaintiffs,
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Seventh Circuit Holds That Replacement Cost Coverage Requires Aesthetic Matching in Hailstorm Claim

In the latest entry of “matching” jurisprudence under first party property policies, the Seventh Circuit Court of Appeals, acknowledging that jurisdictions have reached conflicting results and applying Illinois law, held that a carrier was required to replace undamaged siding to match the panels replaced due to damage in a hailstorm.[1] In doing so, the court affirmed the Northern District of Illinois’ award of summary judgment in favor of the insured on that issue. The parties’ dispute arose out of a
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Absent Policyholder Demand To Settle, Seventh Circuit Affirms Dismissal of Bad Faith Action Against Insurer After Unexpected Excess Judgment

The Seventh Circuit, applying Illinois law, recently tackled the highly-charged issue of a bad faith claim against an insurer for failing to settle for the policy limit. In Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., Inc., the Seventh Circuit closely scrutinized the facts and affirmed the trial court’s decision that the insurer did not act in bad faith.  The coverage dispute arose between the Surgery Center at 900 North Michigan Avenue, LLC (Surgery Center)
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Illinois Appellate Court Reverses Course on Trigger for Malicious Prosecution Claims

An Illinois Appellate Court established a new rule for when malicious prosecution occurs and triggers coverage under a liability policy. In Sanders v. Illinois Union Insurance Company, the court determined that the triggering event for malicious prosecution coverage is the claimant’s exoneration, rather than the initiation of the alleged malicious prosecution. The rule established in Sanders is in direct contrast with a number of Illinois decisions, including several in the past few years that had held that the commencement of the
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Vicarious Liability and Additional Insured Coverage: Illinois Appellate Court Clarifies Factual Allegations Sufficient to Trigger Defense Duty

The Appellate Court of Illinois recently considered whether an underlying complaint against an a general contractor (additional insured), filed by the estate of an independent contractor/subcontractor’s employee who was killed in a job site accident, triggered the defense of the general contractor under the subcontractor’s liability policy. The subcontract at issue contained the standard additional insurance requirements. The court first decided that the liability policy’s additional insured endorsement did not protect an additional insured for its own negligence; and the
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A Subpoena May Be a Claim if the Insured says It Is

Whether or not there is coverage under a D&O Policy to pay for expenses incurred responding to a governmental subpoena is a recurring question that nets an inconsistent answer from courts around the country. While the question is often fact specific, an Illinois Federal Court held that a D&O policy provided coverage for expenses incurred responding to a subpoena, and in fact, looked outside of the subpoena itself to make that finding. In Astellas US Holding, Inc. v. Starr Indem.
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Do Not Pass Go, Do Not Collect Hundreds of Thousands of Dollars: Seventh Circuit Parses Through Insured’s Gamesmanship to Find No CGL Coverage for Settlement of Faulty Workmanship Claim

In Allied Property & Casualty Insurance Co. v. Metro North Condominium Ass’n, No. 16-1868, 2017 U.S. App. LEXIS 4107 (March 8, 2017), the Seventh Circuit found coverage unavailable for a settlement of a lawsuit against a subcontractor alleged to have improperly installed windows at a condominium building. The court’s holding, in essence, was that the bases for the settlement were inconsistent with the claims against the subcontractor, and the only such viable claims could not possibly have been covered under
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What’s Yours is Mine and What’s Mine Isn’t Covered: Illinois Federal Court Rejects Coverage for Suit Seeking Restitution

In Westport Insurance Corp. v. M.L. Sullivan Insurance Agency, Inc., No. 15 C 7294, 2017 U.S. Dist. LEXIS 1527 (N.D. Ill. Jan. 5, 2017), an Illinois federal district court underscored the importance of a policy’s damages requirement when it granted judgment on the pleadings in favor of Westport Insurance Corporation and against its insured M.L. Sullivan Insurance Agency. In the underlying suit, American Inter-Fidelity Exchange (AIFE) alleged Sullivan and one of its employees provided false information about insurance premiums due
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Seventh Circuit Recognizes Illinois Law to Allow Extrinsic Evidence in Evaluating an Insurer’s Duty to Defend

The Seventh Circuit recently handed down a decision encouraging Illinois courts to consider evidence beyond the complaint and the insurance policy when evaluating an insurer’s duty to defend. In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016), the Seventh Circuit reviewed a district court’s judgment on the pleadings favor of a purported insured in a declaratory judgment suit filed by Landmark American Insurance Company. At issue was whether Peter Hilger was covered as an insured in
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Insurers Beware: The Illinois Department of Insurance Issued a Notice of Proposed Rule Regarding Knowledge of Misrepresentations and False Warranties

In August, the Illinois Department of Insurance (DOI) proposed its second rule on misrepresentations and false warranties in less than two years. Citing various concerns, the DOI withdrew its December 2014 proposed rule nearly a year ago, in October 2015. The impetus for the new proposed rule appears to be the DOI’s perception that insurers are not considering “readily available information” before seeking to rescind insurance policies. The new proposed rule on misrepresentations would be promulgated as Ill. Admin. Code
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