Insurance Coverage Disputes
Businesses, professionals and other individuals pay for insurance coverage to protect their assets and gain valuable peace of mind. But unfortunately, insurance companies often use excuses, loopholes or exceptions to avoid paying legitimate claims. This can be a shock and a huge financial burden for the insured who assumed they were protected At the Clinton Law Firm, our insurance coverage disputes lawyers in Chicago have been effective advocates for policyholders in these situations for the last 20 years.Holding insurance companies to their contractual obligations
The Clinton Law Firm’s Chicago insurance coverage disputes attorneys have handled many coverage cases against insurance companies on behalf of policyholders. Our experience includes various types of claims and insurance policies:
- Property and casualty insurance
- Professional liability insurance
- Directors and Officers liability insurance
- Liability insurance
Insurance companies may withhold or delay payment as a negotiating tool, especially when the insurer knows the insured is relying upon receiving payment to meet expenses. By having a Chicago commercial litigation attorney intercede, the insured can send a clear message that it understands its rights and will not settle for less than what it deserves.Taking insurers to task for bad faith behavior
In some circumstances, an insured that has been improperly denied coverage may make a claim for bad faith failure to provide insurance coverage, pursuant to the Illinois Insurance Act, 215 ILCS ¶ 5/155. To deter insurers from behaving in this way, the act allows an insured to recover damages in addition to the amount of the insurance claim. To enforce their rights, it is important for companies and individuals who have a dispute with their insurance carriers to obtain competent representation quickly. The insurance coverage liability lawyers of the Clinton Law Firm carefully document instances of insurance company bad faith to hold those companies accountable for their refusal to pay or diligently investigate and process claims.
To have acted in bad faith, an insurer must do more than simply refuse to pay a claim. Emerson v. American Bankers Ins. Co., 585 N.E.2d 1315 (Ill. App. 5th Dist. 1992). The refusal must be accompanied by vexatious, unreasonable, or outrageous conduct. Id. An insurer has not acted in bad faith by refusing to settle a claim if a bona fide dispute about coverage exists. Butler v. Economy Fire & Cas. Co., 557 N.E.2d 1281 (Ill. App. 2nd Dist. 1990).
In Propitious, LLC, et al. v. Badger Mutual Insurance Company, et al., No. 18 CV 1405 (N.D. Ill. Feb. 7, 2019), the Court dismissed without prejudice a 215 ILCS ¶ 5/155 cause of action, stating that, "Although Connacht alleges that Society has not paid all it is owed under the policy, it fails to plead sufficient facts that show Society wrongfully and unreasonably refused to comply with its policy obligations." Rather, "the complaint reveals that Society participated in discussions to attempt to resolve the coverage dispute, investigated Connacht’s claim, including retaining a third-party adjuster to evaluate the damage to the audiovisual equipment, and made payments for those damages that it determined were covered under the policy in excess of $142,000" Id.
The following conduct by an insurer is likely to violate 215 ILCS ¶ 5/155:
- The insurer knowingly misrepresents relevant facts or policy provisions. Emerson v. American Bankers Ins. Co., 585 N.E.2d 1315 (Ill. App. 5th Dist. 1992).
- The insurer neglects to respond to or acknowledge communications from the insured. Employers Insurance of Wausau v. Ehico Liquidating Trust, 186 Il1.2d 127, 708 N.E.2d 1122, 237 Ill. Dec. 82 (1999).
- The insurer fails to pay the amount it acknowledges is due. Millers Mutual Insurance Association of Illinois v. House, 286 lll.App.3d 378, 675 N.E.2d 1037, 221 Ill.Dec. 613 (5th Dist. 1997).
- The insurer attempts to settle a claim for less than the claim is reasonably worth. Valdovinos v. Gallant Insurance Co., 314 ll1.App.3d 1018, 733 N.E.2d 886, 248 Ill.Dec. 211. (2d Dist. 2000).
- The insurer fails to properly investigate a claim or bases a denial on improper investigative grounds. Smith v. Equitable Life Assurance Society of United States, 67 F.3d 611 (7th Cir. 1995).
- The insurer fails to affirm or deny coverage within a reasonable amount of time of submission of the proof of loss form. Dickman v. Country Mutual Insurance Co., 120 11l.App.3d 470, 458 N.E.2d 199, 76 Ill.Dec. 60 (3d Dist. 1983).
- The insurer fails to defend insured in an underlying action that potentially falls within the policy’s coverage. Bedoya v. Illinois Founders Insurance Co., 293 Ill.App.3d 668, 688 N.E.2d 757, 228 Ill.Dec. 59 (1st Dist. 1997).
On the other hand, a bona fide dispute will generally exist in the following circumstances:
- The language of the insurance policy is ambiguous. Baxter International, Inc. v. American Guarantee & Liability Insurance Co., 369 Il1.App.3d 700, 861 N.E.2d 263, 308 lll.Dec. 198 (1st Dist. 2006).
- There exists a factual dispute over the amount to be paid based on an estimate. Gaston v. Founders Insurance Co., 365 I11.App.3d 303, 847 N.E.2d 523, 301 Ill.Dec. 513 (1st Dist. 2006).
- The insurer relies on Illinois case law to support its coverage position. Ragan v. Columbia Mutual Insurance Co., 291 I11.App.3d 1088, 684 N.E.2d 1108, 226 lll.Dec. 112 (5th Dist. 1997).
Even if an insurer’s coverage position is later found to be erroneous or unacceptable by a court, the dispute could still be bona-fide and that insurer could be found to have acted in good faith. Clayton v. Millers First Insurance Cos., 384 Ill.App.3d 429, 892 N.E.2d 613, 322 Ill. Dec. 976 (5th Dist. 2008). The insurer must at least have some factual or legal support for its defense.Our attorneys fight for insurance policy holders in Illinois
The Chicago insurance coverage disputes attorneys of the Clinton Law Firm are not intimidated by big insurers. We have the legal knowledge, litigation experience and courtroom reputation to get results for our clients. To schedule a consultation and discuss your case with a knowledgeable Chicago business law attorney, call us at 312.357.1515 or contact us online today.Some Basic Legal Concepts That You Should Consider
First, every dispute with an insurance company is a creature of the contract between the insured and the insurance company. The insurance policy is a contract. Under the terms of the policy, the insurance company agrees to insure against certain risks and, very importantly, excludes other risks. The Illinois Supreme Court defined “insurance” in this passage:
By its very nature, insurance is fundamentally based on contingent risks which may or may not occur. (See Bartholomew v. Appalachian Insurance Co. (1st Cir.1981), 655 F.2d 27, 29 (insurer insures against a risk, not a certainty); Keene Corp. v. Insurance Co. of North America (D.C.Cir.1981), 667 F.2d 1034, 1041(insurance contract is based on uncertain loss or the possibility of incurring legal liability).) One dictionary defines "insurance" as "[a] contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in [the] future." (Emphasis added.) (Black's Law Dictionary 721 (5th ed. 1979).) If the insured knows or has reason to know, when it purchases a CGL policy, that there is a substantial probability that it will suffer or has already suffered a loss, the risk ceases to be contingent and becomes a probable or known loss.
Outboard Marine Corporation v. Liberty Mutual, 154 Ill. 2d 90 (1992).
If you have a dispute with your insurance company, the most common form of legal relief is a Declaratory Judgment action. A Declaratory Judgment action asks the court to interpret the policy and decide whether there is coverage or there is no coverage. This requires the court to do a careful analysis of the text of the insurance policy and any exclusions.Remember that you are responsible for carefully reading your insurance policy. The Duty to Defend
This is arguably one of the most important provisions in an insurance policy and is the source of much litigation. You get sued. You read the policy and send the claim to the insurance company. They respond that “We have no duty to defend you against this lawsuit.” Your next remedy is to hire a lawyer to determine if there is a basis for litigation. In most cases, the insurance company’s interpretation of its own policy is correct. The insurer usually understands what risks it agreed to take on for the premium that was paid.
In such cases the court hearing the Declaratory Judgment action will review the allegations of the complaint to determine if there is a duty to defend. If the Complaint has six claims, there is a duty to defend if even only one claim is covered by the insurance policy. As onc court noted: “This duty to defend extends to cases where the complaint alleges several causes of action or theories of recovery against an insured, one of which is within the coverage of a policy while the others may not be. (Krutsinger v. Illinois Casualty Co., 10 Ill.2d 518; Sims v. Illinois National Casualty Co., 43 Ill. App.2d 184.” See Maryland Casualty Company v. Peppers, 64 Ill. 2d 187, 194 (1976).Misrepresentations By the Policyholder
Remember that if you lied to the insurance company or failed to disclose something important, you will lose your coverage.
Also remember that insurance policies exclude willful acts from coverage. Willful acts are deliberate acts taken to harm someone, such as fraud or conversion. It is difficult to obtain insurance for fraud or conversion.
Prompt Notice to the Insurance Company Is Important
You are required to give prompt notice of any potential loss to the insurance company. If you do not, they have the right to decline to cover you. This requirement protects the insurance company and allows it to have a say in how the claim will be resolved.
Please consult our blog to learn further about insurance coverage disputes.