Legal Memorandum: Self-insured counties do not qualify as an insurer when considering insurance policies

Issue: Under Illinois law, when construing insurance policies, does a county qualify as an insurer when it self-insures?

In Du Page County, Radostits, a county employee, drove a county-owned car into another car. State Farm covered Radostits under an umbrella policy that provided it was "’excess over all other valid and collectible insurance.’" Du Page County, 2011 IL App (2d) 100580, ¶ 14. The county insured itself for all losses up to $2 million, with any greater liability covered by an excess insurance policy. Du Page County, 2011 IL App (2d) 100580, ¶ 15. State Farm sought to recover from the county $400, 000, the amount State Farm paid to Radostits’s heirs, plus $100, 000 for the amount State Farm paid to cover Radostits’s liability to another person injured in the accident. Du Page County, 2011 IL App (2d) 100580, ¶¶ 20, 57.

The Du Page County court applied the reasoning of Aetna Casualty & Surety Co. of Illinois v. James J. Benes & Associates, Inc., 229 Ill. App. 3d 413 (1992), in which the appellate court held that the Intergovernmental Risk Management Agency (IRMA), "a pool of self-insured municipalities *** was not a private insurance carrier." Du Page County, 2011 IL App (2d) 100580, ¶ 38. The Du Page County court held that "the County, like IRMA, is not an insurer or an insurance company, nor does it provide insurance coverage." Du Page County, 2011 IL App (2d) 100580, ¶ 40. Because the county did not qualify as an insurer, it could not count as a primary insurer. The Du Page County […]