Complaint Alleges Violations of Illinois Consumer Fraud and Deceptive Business Practices Act, Breach of Contract, and Damages for Vexatious and Unreasonable Delay in Settling Life Insurance Claim
In Cook v. AAA Life Insurance Company, an insured mother died in a tragic accident just a few days after she had paid up the delinquent premiums on a life insurance policy payable to her three-year old daughter, Briannah. The complaint alleged four claims including violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and damages for vexatious and unreasonable delay in settling an insurance claim under Section 155 of the Illinois Insurance Code. In August 2002, Camille Cook (“Camille”) applied for a $200,000 life insurance policy from AAA Life Insurance Company (“AAA Life”), naming Briannah as the beneficiary. AAA Life accepted the application and issued the policy to Camille. In May 2005, AAA Life mailed Camille a reminder that she must pay $67.50 for three months of premiums, due on May 14, 2005. Camille did not pay this premium before June 15, 2005. In July 2005, Camille sent a check for $135 to AAA Life, and the check was duly honored and paid by her credit union on July 19, 2005. Five days later, on July 24, Camille drowned in a boating accident.
The court reviewed whether AAA Life’s settling of the claim of Bruce Cook (“Bruce”), Camille’s husband and Briannah’s father, violated Section 155 of the Illinois Insurance Code.
By enacting Section 155 of the Illinois Insurance Code, the legislature sought to effectuate a balance between the individual insured party’s need for compensation and the broad societal interest in avoiding excessive damage awards that result in price increases to all policyholders. Whether a delay is vexatious and unreasonable is a question of fact that must be assessed based on the totality of the circumstances, taken in broad focus.
AAA Life’s delay to retain outside counsel was reasonable. Here, AAA Life sought to insulate itself from liability and attempted to get the probate court to adjudicate the amount of the fees of the firm of Cook & Revak, Ltd (the “Cook firm”) Illinois law establishes that any settlement on behalf of a minor child requires the court’s approval. If AAA Life had made payment to Bruce after receiving the declaration of trust, it may have subjected itself to future liability. Similarly, if AAA Life had paid Briannah’s estate $120,000 and paid the Cook firm $80,000 in attorney fees, it could have also subjected itself to liability. Accordingly, with regard to the October 21, 2005 to the end of March 2006 time period, Bruce failed to meet his burden that the delay in settling his claim was due to vexatious and unreasonable conduct on the part of AAA Life.
Cook v. AAA Life Ins. Co., 2014 IL App (1st) 123700.
