The Impact of Selective Tender And Actual Notice on Additional Insureds in Illinois

This course, taught by Andrew Witik, is a follow-up to his previous program "Know Your Business And The Impact of Actual Notice on Additional Insureds in Illinois." This program will cover the topic and application of the rules of "selective tender" and "actual notice" under Illinois law and the significant impact they 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.

In addition, Illinois adheres to the minority rule of selective or "targeted" tender on the part of the insured. The insured has the paramount right to choose or not choose an insurer's participation in a claim and that right encompasses the right to deactivate coverage with an insurer previously selected for purposes of invoking exclusive coverage with another insurer.

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 especially vigilant and be aware of their obligations under Illinois law.

1. Examine the Illinois rule on selective tender 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