Court Opinion

ID: 9743682
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:40:20.537601+00
Date Added: 2024-06-11T12:24:51.778218
License: Public Domain

PRESIDING JUSTICE JIGANTI, dissenting: The majority correctly states the applicable law. Insurance policies are contracts. The general rules of construction that apply to other contracts also apply to insurance policies. In apparent deference to the proposition that a policy should be construed as a whole with the goal of best effectuating the intentions of the parties (see J G Industries, Inc. v. National Union Fire Insurance Co. (1991), 218 Ill. App. 3d 1061), the majority acknowledges that “[t]he word ‘or’ will not be given its literal meaning when such meaning would do violence to the evident intent and purpose of the contracting parties, and the nonliteral meaning would give effect to such intent.” (219 Ill. App. 3d at 813.) The majority then proceeds to engage in a tedious grammatical exercise which leads to a result not only clearly unintended by the parties, but also flagrantly at odds with basic principles of insurance law. The policy in the case at bar is a “claims made” policy. As we stated in Graman v. Continental Casualty Co. (1980), 87 Ill. App. 3d 896, 899, 409 N.E.2d 387, 390, “[i]t is well established that the ‘claims made’ or ‘discovery’ policy is characterized by coverage for negligent acts or omissions only if such are discovered during and brought to the attention of the insurer within the policy term.” (Emphasis added.) The policy here provides that: “This insurance applies: * * * 3. To ‘claims made’ during the policy period if: a. The claim arises during the policy period; or b. The error, omission, or negligent act giving rise to the claim took place prior to the policy period but after the retroactive date specified in the declarations, if applicable, provided that: (1) you had no knowledge of the claim prior to the beginning of this policy; and (2) you had no knowledge of any situation that resulted in the claim; and (3) there is no other valid insurance for the claim.” Although inartfully drawn, a reasonable construction of this language would be that the policy covers negligence actually committed during the policy period as well as negligent acts which were committed prior to the policy period but remained undiscovered by the insured until the time covered by the policy. The majority instead seizes upon the fact that another section of the policy includes the “filing of a suit” as one of its alternate definitions of the term “claim.” It then concludes that because the instant lawsuit “arose” during the policy period, coverage was provided under section 3(a) of the policy despite the fact that the insured knew of the alleged negligence giving rise to the suit long before the effective date of the policy. The majority’s interpretation leads to absurd results. Under its interpretation, an insured could be notified of an event resulting in damages and then obtain an insurance policy with the knowledge that a lawsuit was forthcoming. In my opinion, this result undercuts the fundamental nature of an insurance contract and renders the policy in question an absolute performance bond. It defies logic to hold, as does the majority, that Security bargained for the opportunity to expose itself to liability in excess of $50 million in exchange for a $400,000 premium. As noted by Security in its brief, an insurance company is not in the business of insuring events which have already occurred and which are known to the insured. For the foregoing reasons, I respectfully dissent from the majority opinion.