Opinion ID: 476878
Heading Depth: 2
Heading Rank: 1

Heading: The Company shall indemnify and hold the Agent harmless:

Text: 1 Against any claims, liabilities or costs of defense which the Agent may become obligated to pay as a result of loss to policyholders caused directly by error of the Company in the processing of Direct Billed policies under its Agreement except to the extent that the Agent has caused, contributed to or compounded such error; and 2 against any and all civil liability for damages and expenses, including the cost of defense that the Agent may be obligated to pay as a direct result of the failure of the Company to comply with the requirements of the Fair Credit Reporting Act (Public Law 91-508) except to the extent that such failure to comply has been caused or contributed to by any willful or intentional act or omission of the Agent B. The Company's obligation to indemnify shall be conditioned upon prompt notification by the Agent to the Company of any claim made or legal action brought against the agent which is subject to indemnification as set forth above and the Company shall have the right to direct the investigation, settlement and defense of any such claim or action. 11 The court reserved the question of the viability of implied indemnity in cases involving a defective product or vicarious liability 12 In Cleary the plaintiff alleged that the insurance company was negligent in breaching its duty to counsel her as to the inadequacy of her insurance coverage. The plaintiff claimed that her homeowner's coverage should have put the insurance company on notice that she owned residential and farm property (and presumably required greater automobile insurance coverage to protect this property). The court rejected the argument that the insurer had a continuous duty to advise and counsel its insured as to the need or advisability of increased insurance coverage. 63 Ill.App.3d at 638, 20 Ill.Dec. at 548, 380 N.E.2d at 526 In Central States the plaintiff requested that the insurance company change its pension funding insurance contract to eliminate a cash lump-sum payment provision. Plaintiff alleged that the defendant should have disclosed that the policy also contained an annuity purchase provision that had the same deleterious effect as the cash payment provision--both provisions caused a cash drain problem. The court rejected this claim and held for the defendant. 13 Count VII adopts the allegations found in Count VI of the Complaint, which allege that Reliance: a) negligently and improperly reduced the limits of plaintiff's insurance coverage so as to create a gap in plaintiff's coverage between its policy and the umbrella coverage issued to plaintiff by Aetna Casualty & Surety Company of Illinois; b) negligently and improperly renewed said improper reduction of coverage; c) negligently issued and renewed coverage to plaintiff for specified losses up to $100,000.00 per person, when it knew or should have known that plaintiff had umbrella coverage which required $250,000.00 per person in underlying primary liability coverage; d) negligently failed to make proper inquiry or conduct proper investigation into plaintiff's insurance coverage, needs and history prior to issuing policy # AK 9 94 51 20; e) negligently failed to deal promptly with plaintiff; f) negligently made or caused to be made numerous errors in issuing and processing policy # AK 6 38 74 22, so as to cause the improper reduction of plaintiff's coverage to be written into its replacement policy # AK 9 94 51 20; g) negligently and improperly refused to renew plaintiff's thrift policy of insurance, # AK 9 24 37 85, thereby causing plaintiff's coverage to be improperly reduced and a gap in his coverage to result; h) negligently and wrongfully refused to pay the loss described in plaintiff's complaint so that a gap was created; i) was otherwise negligent in issuing, processing, maintaining or renewing policy # AD 9 24 37 85, policy # AK 9 24 37 85 and/or policy # AK 9 94 51 20, which, in whole or in part, caused a gap in plaintiff's insurance coverage where, absent such negligence by Reliance, no such gap would have existed. Third Party Complaint, Count VI, p 14. 14 Reliance argues that such a failure has not, and cannot, be alleged by Esser. We believe, however, that the complaint, especially p 14(f), can be read as alleging such a breach of duty 15 Under Illinois law, insured-agent cases are treated differently from insurer-insured cases. In an insured-agent case, in which the insured seeks to prove that the agent negligently performed its duty to procure a specified party, the insured's failure to read the policy and point out errors may be evidence of contributory negligence, but is never contributory negligence as a matter of law. See Floral Consultants, Ltd. v. Hanover Insurance Co., 128 Ill.App.3d 173, 176, 83 Ill.Dec. 401, 403, 470 N.E.2d 527, 529 (1984); Black v. Illinois Fair Plan Assoc., 87 Ill.App.3d 1106, 1110-11, 42 Ill.Dec. 934, 938, 409 N.E.2d 549, 553 (1980) 16 We need not resolve here the issue whether Reliance can rely on a defense that it would have had against a claim by Lazzara to defeat a third-party claim for contribution by Esser