Requirements must be Satisfied before Insurer has Duty to Defend
In Illinois Insurance Guaranty Fund v. Chicago Insurance Co., the plaintiff, Illinois Insurance Guaranty Fund (“the Fund”), filed a declaratory judgment action against the defendant, Chicago Insurance Company (“Chicago Insurance”), for the court to determine whether a “claims-made” insurance policy issued to Women’s Care of Southern Illinois, P.C. (“Women’s Care”) provided insurance coverage for a former employee of Women’s Care, Dr. John Hucker. Chicago Insurance issued the policy. The insurance dispute stemmed from a separate lawsuit for medical malpractice filed against Women’s Care and Dr. Hucker on January 22, 2002, during the effective date of coverage of the claims-made policy. The lawsuit alleged that Dr. Hucker committed medical malpractice on March 25, 2000, while he was employed by Women’s Care. However, Dr. Hucker’s employment with Women’s Care ended on December 31, 2000, and he was not expressly named as an insured in the claims-made policy that was issued by Chicago Insurance until after the employment relationship ended. Both the Fund and Chicago Insurance filed cross-motions for summary judgment on the issue of Chicago Insurance’s duty to defend Dr. Hucker in the malpractice lawsuit. The circuit court ruled in favor of the Fund and found that Chicago Insurance was obligated to pay for Dr. Hucker’s defense against the malpractice claim.
Chicago Insurance argued that the unambiguous language of the claims-based insurance contract provided that Dr. Hucker was not an insured and did not fit within the coverage parameters set forth in the insurance contract. The Fund, however, argued that Chicago Insurance had a duty to defendant Hucker because he fell within the policy’s coverage language. The Fund also argued, alternatively, that the language of the policy was ambiguous with respect to its coverage of claims against Dr. Hucker and that the court must construe the policy against the insurance company and in favor of coverage.
The court reviewed whether Dr. Hucker qualified as an insured under the language of Chicago Insurance’s provided coverage. The court held that the language of the contract was not ambiguous and that Dr. Hucker did not qualify as an insured under Section II.E. The plain reading of Section II.E. provided that it applied only to employees “other than a physician or surgeon.” Section II.E. was inapplicable because Dr. Hucker was a physician.
Illinois Insurance Law: Two requirements must be satisfied before an insurer’s duty to defend arises: (1) the action must be brought against an insured, and (2) the allegations of the complaint must disclose the potential of policy coverage. If the allegations of the complaint reveal that the claim at issue was not brought against an insured, then the insurer can justifiably refuse to defend because there is no duty to defend the underlying action.
Illinois Ins. Guaranty Fund v. Chicago Ins. Co., 2015 IL App (5th) 140033.
