October 14, 2019

October 14, 2019

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Insurance Coverage: Illinois Court Rules Policy Language Precluded Replacement Cost for Equipment More Than Five Years Old

The Plaintiff was a contractor whose crane was destroyed in an unexpected microburst storm. It filed a declaratory judgment action seeking to recover replacement costs for damaged property and statutory penalties from its insurer for vexatious refusal to settle the claim. The policy provided the carrier would pay for the replacement cost of the equipment less than five years old. However, it was undisputed the crane was older and the trial court ruled in favor of Travelers.

The First District affirmed. The crane was manufactured 15 years before the incident and, consequently, Travelers would only be obligated to pay the actual cash value which was less than the $25,000 deductible under the policy. Further, it was a legitimate dispute and Travelers could not be guilty of vexatious refusal to settle. Area Erectors Inc. v. Travelers Property Casualty Co. of America, 2012 IL App (1st) 111764 (12/7/12). 

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