What’s the Outlook for Insurance Producers’ Liability if Their Clients’ COVID-19 Business Interruption Claims are Denied?

As businesses navigate challenges from COVID-19 shutdowns, many owners are questioning insurance producers about denied business interruption claims. This article examines the legal implications for producers, including defenses against failure-to-procure claims. With insights from Illinois law and key precedents, learn how producers can protect themselves against potential lawsuits and understand the liability landscape.

Does an Illinois Insurance Producer Owe a Legal Duty to an Additional Insured on a Policy It Procured? It Certainly Shouldn’t, and Here’s Why

Does an Illinois insurance producer have a legal duty to an additional insured on a policy? This matter is crucial as general contractors seek coverage through subcontractors’ policies. However, Illinois law indicates otherwise. The Illinois Code of Civil Procedure states that a producer’s duty arises only after a specific request from the insured. Without such a request, producers may not be liable to additional insureds. Understand the duty of care shaped by the insured’s request.

Self-Serving Pleadings for Additional Insureds

In Pekin Insurance Co. v. Johnson-Downs Construction, Inc., the Illinois Appellate Court clarified what pleadings may be considered when deciding whether to stay a coverage declaratory judgment action. The court held that a putative additional insured cannot rely on its own third-party complaint to create coverage, but an underlying plaintiff’s amended complaint may be considered if it is factually supported and not a transparent attempt to plead into coverage.