There Is No Duty to Defend If the Alleged Facts Do Not Fall Under the Coverage of the Insurance Policy
The trial court held that Farmers Automobile Insurance (Farmers) had a duty to defend Michael Danner and Tracy Watson (the defendants) in a lawsuit filed by David Winkler.
Farmers appealed the trial court decision finding a duty to defend Danner and Watson. The underlying action between the defendants and Winkler alleges that Danner and Watson committed battery against Winkler. Farmers claimed they had no duty to defend because the alleged facts in the lawsuit were not covered under the policy and that the policy only covered accidental occurrences, not intentional acts. Danner and Watson argued that the provision excluding intentional acts did not apply because Danner and Watson claimed self defense. However, the court found the argument was without merit. The trial court held that even though the acts by Danner and Watson were intentional, Farmers still had a duty to defend because the provision in the policy stated that Farmers would provide defense even if the suit was groundless or fraudulent.
On de novo review, the appellate court considered the underlying lawsuit allegations in relation to what was specifically covered in Danner and Watson’s insurance policies. In reading the policy as a whole and considering the intent of the policy, the court found that the duty to defend results when an otherwise covered claim, is groundless or fraudulent.
Specifically, the appellate court stated that there was no duty to defend because the underlying lawsuit allegations do not fall within a covered claim under the policy. When the underlying suit alleges facts that may be covered under the insurance policy, the insurer has a duty to defend even if the suit is groundless or fraudulent. However, there is no duty to defend if the alleged facts do not fall under the coverage of the insurance policy. The court reversed the trial court decision, finding that Farmers had no duty to defend Danner and Watson. The matter was remanded back to the trial court for determination on Farmer’s motion for judgment in light of the appellate court finding.
Farmers Auto. Ins. Ass’n v. Danner, 2012, 936 N.E.2d 780 (Ill.App. 4 Dist., 2012)
