Seventh Circuit Archives - The Insurance & Reinsurance Report

September 5, 2019 Uncategorized

Seventh Circuit Holds That Replacement Cost Coverage Requires Aesthetic Matching in Hailstorm Claim

In the latest entry of “matching” jurisprudence under first party property policies, the Seventh Circuit Court of Appeals, acknowledging that jurisdictions have reached conflicting results and applying Illinois law, held that a carrier was required to replace undamaged siding to match the panels replaced due to damage in a hailstorm.[1] In doing so, the court affirmed the Northern District of Illinois’ award of summary judgment in favor of the insured on that issue.

The parties’ dispute arose out of a May 2014 hailstorm that …

April 24, 2017 Professional Liability

Frankly, My Dear, I Don’t Give a “Dam”: Seventh Circuit Holds Professional Liability Insurer Off the Hook in Neighborhood Dispute Tangentially Related to Unobtained Dam Permit

In Madison Mutual Insurance Co. v. Diamond State Insurance Co., No. 15-3292 (7th Cir. Mar. 21, 2017), the Seventh Circuit handed down a decision delineating the obligations between a professional liability insurer and a homeowner’s insurer. At bottom, the court refused to hold a professional liability insurer responsible for the defense of a suit that only tangentially referencing the insured’s professional services.

As background, Dr. William and Wendy Dribben purchased a house in 1999 at Heartland Oaks, an exclusive development. The seller of the …

March 16, 2017 Commercial General Liability

Do Not Pass Go, Do Not Collect Hundreds of Thousands of Dollars: Seventh Circuit Parses Through Insured’s Gamesmanship to Find No CGL Coverage for Settlement of Faulty Workmanship Claim

In Allied Property & Casualty Insurance Co. v. Metro North Condominium Ass’n, No. 16-1868, 2017 U.S. App. LEXIS 4107 (March 8, 2017), the Seventh Circuit found coverage unavailable for a settlement of a lawsuit against a subcontractor alleged to have improperly installed windows at a condominium building. The court’s holding, in essence, was that the bases for the settlement were inconsistent with the claims against the subcontractor, and the only such viable claims could not possibly have been covered under the subject CGL policy.…

February 3, 2017 Duty to Defend

No Duty, No Problem: Seventh Circuit Finds Absence of Duty for Insurance Broker to Non-Client in Connection with Fraudulent Insurance Scheme

The Seventh Circuit recently handed down a decision in which it refused to recognize a negligence claim against an insurance broker which would have expanded the duties of brokers and agents beyond those articulated in the Illinois Insurance Placement Liability Act (IIPLA), 735 ILCS 5/2 2201. In M.G. Skinner & Associates Insurance Agency v. Norman-Spencer Agency, Inc., No. 15-2290, 2017 U.S. App. LEXIS 63 (7th Cir. Jan. 4, 2017), the Seventh Circuit affirmed the district court’s grant of summary judgment in favor of Norman-Spencer …

January 18, 2017 Duty to Defend

Don’t Let The Door Hit You on the Way Out: Insurer Loses Coverage Suit Involving Injuries Sustained By Fitting Room Door

In Selective Insurance Co. of South Carolina v. Target Corporation, No. 16-1669, 2016 U.S. App. LEXIS 23370 (7th Cir. Dec. 29, 2016), the Seventh Circuit affirmed an Illinois district court’s decision finding coverage for an additional insured after parsing through the language of two contractual agreements.

The coverage dispute arose when a customer shopping at a Target store was injured after a fitting room door came off and fell on her in December 2011. The customer filed suit against Target, alleging it was negligent …

November 30, 2016 Duty to Defend

Seventh Circuit Recognizes Illinois Law to Allow Extrinsic Evidence in Evaluating an Insurer’s Duty to Defend

The Seventh Circuit recently handed down a decision encouraging Illinois courts to consider evidence beyond the complaint and the insurance policy when evaluating an insurer’s duty to defend. In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016), the Seventh Circuit reviewed a district court’s judgment on the pleadings favor of a purported insured in a declaratory judgment suit filed by Landmark American Insurance Company. At issue was whether Peter Hilger was covered as an insured in connection with lawsuits filed …

October 24, 2016 Life, Health, Disability & ERISA

Seventh Circuit: No Insurable Interest, No Problem (For the Beneficiary, That Is!)

The Seventh Circuit recently affirmed a district court decision upholding payment under a life insurance policy purchased by a securities intermediary. The decision first addressed the common law’s prohibition on wagering contracts, or stranger-originated life insurance, and the traditional remedy which invalidates any such policy of insurance. However, this case was subject to Wisconsin law, whose legislature places the risk on the insurer for issuing a policy to someone without an insurable interest by refusing to invalidate such contracts. Specifically, the Wisconsin statute reads (Wis. …

August 8, 2016 Emerging Issues

Seventh Circuit Finds Coverage for State’s Suit Seeking Costs of Drug Addiction

States and municipalities around the country have sued pharmaceutical companies for their alleged role in increasing levels of addiction and overuse of pharmaceutical products. These suits have given rise to insurance coverage disputes over whether such claims are covered under the pharmaceutical companies’ policies. The U.S. Court of Appeals for the Seventh Circuit has now weighed in on one such dispute and held that West Virginia’s suit seeking recovery of costs it incurred to provide services to citizens addicted to prescription drugs is a covered …

July 28, 2016 Duty to Defend

Seventh Circuit Dispatches Insurer’s Coverage Defenses Against Ambulance Company

The Seventh Circuit affirmed a district court’s summary judgment in favor of an insured, finding that the insured may qualify as being in a “joint venture” with the named insured. In American Alternative Insurance Corp. v. Metro Paramedic Services, Inc. (Jul. 12, 2016), the issue confronting the court was whether allegations in the underlying complaint that the named insured and putative insured were engaged in a joint venture also satisfied the policy’s use of the term “joint venture,” at least for purposes of the insurer’s …

March 23, 2016 Professional Liability

Rescission Available to Insurer Whose Insured Lied in Insurance Application About Use of Experimental Weight Loss Techniques

In Essex Insurance Company v. Galilee Medical Center S.C d/b/a MRI Lincoln Imaging Center, the insured, Galilee, represented to its insurer, Essex, that it did not offer any weight loss drugs to its patients. After a former patient brought suit against Galilee based on complications from injections of a weight loss drug, Essex sought to rescind its policy. The Seventh Circuit Court upheld summary judgment granted to Essex, finding that false statements made by Galilee provided a basis for rescission.

Galilee, a Delaware corporation …