Know Your Business And The Impact of Actual Notice on Additional Insureds in Illinois

This course, taught by Andrew Witik, a partner in the Insurance practice at Tressler LLP, will cover the topic and application of the rule of "actual notice" under Illinois law and the significant impact it can have on additional insureds and their businesses.

Illinois follows the minority rule and does not always require an additional insured to tender a lawsuit for which it desires a defense. Under certain circumstances, the named insured's insurance carrier may become aware or learn that an additional insured endorsed on its named insured's liability policy has been sued in the same lawsuit as the named insured. The result of having actual notice of the lawsuit against the additional insured is that the insurer's duty to defend is triggered. Once this occurs, under the rule of actual notice, the insurer has an affirmative duty to contact the additional insured to determine whether the additional insured wants the insurer to defend or participate in its defense.

The insurer's knowledge of these facts, and that the allegations in the plaintiff's complaint potentially fall within the scope of coverage under its policy, can have a profound impact on how litigation expenses and costs are paid, so businesses and their counsel must be vigilant.

Both general counsel and in-house coverage counsel must ensure that the insurer has performed a simple review and comparison of the allegations in the plaintiff's complaint and terms of the named insured's liability policy, so as not to be caught unawares of its obligations. In the current climate of rising litigation costs, the defense provided to the additional insured can result in significant savings of expenses that the additional insured business can pass on to an insurer other than its own and avoid a detrimental effect on its future premiums. In addition to these considerations, this course will also explore how the doctrine of estoppel may come into play against an insurer that ignores the fact that it has actual notice of a lawsuit filed against an additional insured on its policy of insurance.

Learning Objectives: 

1. Understand the Illinois rule on actual notice and additional insureds
2. Identify the steps general counsel must take to ensure their insurance carrier is aware of any additional insureds and its defense obligations
3. Assess the cost-saving implications of the rule and its impact on business decisions