Insurance Coverage Law

Generally speaking, Illinois is like many other states in that it determines coverage by comparing the underlying complaint to the policy “to determine whether facts alleged in the underlying complaint fall within or potentially within coverage.” Title Indus. Assurance Co., R.R.G. v. First Am. Title Ins. Co., 853 F.3d 876, 883 (7th Cir. 2017). Thus, it is called the “eight corners rule”. Furthermore, the court liberally construes the underlying complaint and the insurance policy in the manner reasonably most favorable to the insured. 

As with most jurisdictions, ambiguities are construed in favor of coverage. So initially, to review insurance coverage for a particular claim, a copy of the complaint is needed, or a copy of the demand letter, and a copy of the policy under which coverage is sought. The Hughes Firm, LLC can help with that process and guide you as to whether or not coverage is owed.

Illinois does have a section in the Illinois Insurance Code to address bad faith allegations against an insurance company, in 215 ILCS 5/155. Essentially, if an insurer has not handled a claim correctly, it can be liable for legal fees and statutory damages of an additional 60% of the claim up to $60,000. 

Insurers therefore need to be careful to not only analyze and handle claims appropriately, but to respond to bad faith claims with caution.