Opinion ID: 2087054
Heading Depth: 1
Heading Rank: 2

Heading: policy construction

Text: The construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment. (See Outboard Marine Corp., 154 Ill.2d at 108, 180 Ill.Dec. 691, 607 N.E.2d 1204; Zurich Insurance Co. v. Raymark Industries, Inc. (1987), 118 Ill.2d 23, 58, 112 Ill.Dec. 684, 514 N.E.2d 150.) In construing an insurance policy, the primary function of the court is to ascertain and enforce the intentions of the parties as expressed in the agreement. ( Outboard Marine Corp., 154 Ill.2d at 108, 180 Ill.Dec. 691, 607 N.E.2d 1204; de los Reyes v. Travelers Insurance Cos. (1990), 135 Ill.2d 353, 358, 142 Ill.Dec. 787, 553 N.E.2d 301.) To ascertain the intent of the parties and the meaning of the words used in the insurance policy, the court must construe the policy as a whole, taking into account the type of insurance for which the parties have contracted, the risks undertaken and purchased, the subject matter that is insured and the purposes of the entire contract. ( Outboard Marine Corp., 154 Ill.2d at 108, 115, 180 Ill.Dec. 691, 607 N.E.2d 1204; see Dora Township v. Indiana Insurance Co. (1980), 78 Ill.2d 376, 378, 36 Ill.Dec. 341, 400 N.E.2d 921.) If the words in the policy are plain and unambiguous, the court will afford them their plain, ordinary meaning and will apply them as written. ( United States Fire Insurance Co. v. Schnackenberg (1981), 88 Ill.2d 1, 57 Ill.Dec. 840, 429 N.E.2d 1203.) The court will not search for ambiguity where there is none. Schnackenberg, 88 Ill.2d at 5, 57 Ill.Dec. 840, 429 N.E.2d 1203. The professional liability policies before us provide in relevant part: (1) Professional Liability and Claims Made Clause: To pay on behalf of the Insured all sums in excess of the deductible amount stated in the Declarations which the Insured shall become legally responsible to pay in damages as a result of CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD: (a) by reason of any act, error or omission in professional services rendered or that should have been rendered by the Insured or by any person for whose acts, errors or omissions the Insured is legally responsible, and arising out of the conduct of the Insured's profession as a real estate agent or real estate broker including the following related activities for real estate: consultation, appraisal, property management, property management consultation or notary public,   . (Emphasis added.) In construing the scope of coverage afforded by the policies before us, we initially consider the type of policy for which the parties have contracted. The policies at issue in this case are professional liability policies. This type of policy is similar to medical and legal malpractice insurance policies. In the nonmedical, nonlegal professions, this type of policy is commonly referred to as an error-and-omissions policy. (See 7A J. Appleman & J. Appleman, Insurance Law Practice § 4504.01, at 309 (rev. 1979).) This type of policy provides: a specialized and limited type of coverage as compared to comprehensive insurance; it is designed to insure members of a particular professional group from the liability arising out of a special risk such as negligence, omissions, mistakes and errors inherent in the practice of the profession. (Emphasis added.) (7A J. Appleman & J. Appleman, Insurance Law & Practice § 4504.01, at 310 (rev. 1979).) Another authority on insurance law has described this type of policy similarly: Errors and omissions policies form the equivalent to malpractice insurance for occupations other than those in the legal and medical fields. Where such a policy stated it provided coverage for the `negligent acts, errors or omissions' of the insured, coverage would exist for the insured's negligent performance of its contract. But coverage is generally extended to a particular class of risks and is not a substitute for liability coverage. (Emphasis added.) 11 Couch on Insurance 2d § 44:396, at 573-74 (rev. ed. 1982). Under the policies at issue, the risks undertaken by the insurers are those which are inherent in the practice of the real estate profession. Although there may be a myriad of risks to which one performing services in a real estate professional capacity may be exposed, covered risks are only those which inherently arise out of the rendering of the real estate services. The policies at issue are claims-made policies. According to the plain terms of the policies, the claims must be made by reason of any act, error or omission in [real estate] professional services rendered. (Emphasis added.) The phrase by reason of has been defined as [b]ecause of, [b]y means, acts, or instrumentality of. (Black's Law Dictionary 201 (6th ed. 1990).) We construe this phrase to mean that the claims made against the insureds by the underlying plaintiff must be made because of an act, error, or omission in the insured's performance or rendering of real estate services. There must be a direct, causal relationship between the insured's performance of real estate services and the underlying claims made against the insured in order for the claims to be covered under these policies at issue.