Opinion ID: 700249
Heading Depth: 1
Heading Rank: 2

Heading: Reformation of the Intoxication Exclusion Clause

Text: 8 The Illinois legislature has imposed, through its Insurance Code, several public policy-based requirements upon insurance policies either issued or sold in Illinois. 2 Among them is the requirement of section 357.25 that any intoxication exclusion written into a policy must use precise, statutorily provided language indicating that the insured's intoxication must cause the loss in order to trigger the exclusion. 3 If section 357.25 were to apply in this case, then Penney's status exclusion, which would deny coverage to an insured merely upon proof of his intoxication and without regard to the cause of his loss, could not stand as written. 9 The legislature, however, has also exempted group insurance policies, unless otherwise provided, from section 357.25 and certain other public policy-based requirements. 4 Penney argues that its policy is a group insurance policy, and is therefore exempt from section 357.25's causation requirement. While we find that Penney's policy is properly classified as a group policy, that classification ultimately does not save its intoxication status exclusion, as written, from reformation. 10
11 Section 230.1 of the Insurance Code initially purports to define group policies as only those offered to groups described in the statute. Holders of the same credit card are not among the groups described. Section 230.2, however, allows group insurance policies to be offered to groups other than those defined in section 230.1, when the state Director of Insurance approves such policies pursuant to criteria set forth in the section. 12 In the present case, the Director approved Penney's proposed group master policy after being apprised of the group's potential membership. Because the parties allege no facts to the contrary, we presume that the Director properly considered the criteria of section 230.2 in reaching her decision to approve the application. The district court therefore correctly determined that the Penney policy was a valid group policy.
13 The classification of Penney's policy as a group policy, however, does not save its intoxication status exclusion in the end. As we have already pointed out, sections 356a to 359a are stated to be inapplicable to group policies like Penney's unless otherwise specifically provided  by the legislature. 215 ILCS 5/362a (emphasis added). The Illinois legislature has otherwise specifically provided. Section 367(2) of the Code reinserts the substance of certain public policy-driven requirements for group insurance policies. 5 That includes section 357.25's requirement, at least in substance, that an insured's intoxication cause the loss before any intoxication exclusion is triggered. We have no difficulty concluding that Penney's status intoxication exclusion differs in substance from the causation intoxication exclusion prescribed by section 357.25. 14 We conclude that the policy must be reformed to include a causation requirement in its intoxication exclusion. The district court read the policy not to require causation, and its judgment was based upon that reading. The judgment accordingly must be reversed. The district court did not reach the question of causation, and we decline Penney's invitation, extended during oral argument, to rule on that factual issue in the first instance.