March 21, 2019

March 21, 2019

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March 20, 2019

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March 19, 2019

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Insured May Settle Claim Before Suit if Insurer Wrongfully Denies Coverage

In Selective Ins. Co. v. Cherrytree Cos., 2013 IL App (3) 120959, the Illinois Appellate Court for the Third District drove the final nail in the insurer’s “if there is no duty to defend, there is no duty to indemnify” coffin.  Holding that an insured had the right to settle a claim for defective construction after the insurer wrongfully denied coverage, the court reaffirmed its previous ruling that Zurich Ins. Co. v. Carus Corp., 293 Ill. App. 3d 906 (1997) misstated and misconstrued the law when it held that “when there is no duty to defend, there will be no duty to indemnify.”  The court explicitly ruled that a standard general liability policy does not require the filing of a “suit” before the insured is entitled to seek indemnification for damages it is legally obligated to pay to a third party.

Not only does the majority opinion bring a smile to my lips, but the dissent by Justice Schmidt articulates one of my other favorite rules that “whereas here, the insurer denies coverage, the insured is entitled to do what he or she can to cut his or her losses, and need not wait until suit is filed to once again make demand on the insurer.”  Hooray, sanity reigns in the Third District.

© 2019 Neal, Gerber & Eisenberg LLP.

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About this Author

Jill B. Berkeley, Partner, Neal Gerber law firm
Partner

Jill B. Berkeley chairs the firm’s Insurance Policyholder practice group. Chambers USA reports that clients describe her as “a breath of fresh air in litigation,” and “an outstanding lawyer with encyclopedic knowledge of case law.” She is recognized by her peers as having “great stature nationally” and being “a pillar of the policyholder community.” Jill represents policyholders and claimants in insurance coverage disputes involving toxic torts and hazardous wastes, environmental pollution, construction, products liability, intellectual property, first-party property, business...

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