Legal Memorandum: Determining an insurer’s obligation to the insured by reviewing policy provisions

Issue: Under Illinois law, when does an insurer have a duty to defend the insured?

In order to determine whether an insurer has a duty to defend the insured, a court must examine the allegations in the underlying complaint and compare them to the relevant provisions in the insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 107 (1992). If the allegations in the underlying complaint fall within or potentially within the policy’s coverage, the insurer’s duty to defend arises even if the allegations are groundless, false, or fraudulent. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 73 (1991). An insured has the burden of proving that a claim falls within the coverage of the policy. Addison Insurance Co. v. Fay, 376 Ill.App.3d 85, 88 (2007). Once the insured satisfies this burden, the insurer has the burden of proving that the loss was limited or excluded by a contract provision. Stoneridge Development Co. v. Essex Insurance Co., 382 Ill.App.3d 731, 749 (2008).

Travelers Personal Ins. Co. v. Edwards, 2016.IL.141595 (Ill. App. Dist. 1. Jan. 29, 2016).

Date: March 1, 2016
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