Illinois Appellate Court Explains Distinction Between Primary and Excess Insurance Coverage Policies

Understanding the role that insurance policies may have in your claim can be critically important to ensuring that you receive the compensation that you deserve. Accidents can lead to considerable damages and expenses, especially when long-term injuries and permanent disabilities are involved. As Illinois personal injury lawyers, we have substantial experience dealing with insurance companies.

In a recent appellate decision, an employee filed a lawsuit against its former employer for injuries that the employee sustained as a result of long-term exposure to asbestos. The employee notified every insurance company that had sold policies to the employer during the relevant time period. One of the insurance companies contended that the policies it provided to the employer for the relevant time period should be viewed as excess insurance because the employer had agreed to a self-insured retention program as opposed to a deductible for that period of time. The employer asserted a counterclaim, seeking a judgment declaring that the insurer’s policies should be viewed as primary coverage for the relevant time period. The lower court granted the employer’s motion for summary judgment on this issue.

The insurer appealed, arguing that any policy that refers to a self-insured retention must be viewed as an excess policy according to Illinois case precedent. The appellate court rejected this, finding that Illinois courts have detailed other characteristics that will help distinguish between primary and excess insurance policies. For example, courts have ruled that excess policies do not typically require immediate notice of an accident or event, as primary policies typically do. Insurers that provide excess insurance are not concerned with every accident that happens, but only those that are severe enough to warrant excess coverage. Also, excess coverage is contingent on the insured exhausting his or her primary coverage. As a result, excess coverage providers typically do not require notification until there is a reasonable likelihood that the excess insurance policy will be necessary. As a result, courts have concluded that excess insurance policies provide the insured with some amount of discretion.

Conversely, primary coverage attaches immediately at the point that an accident or incident giving rise to liability occurs. These policies impose a duty to defend on the insurer, separate from a duty to indemnify the insurance policyholder against the claim. In comparison, most excess insurance policies require the insurer to indemnify the policyholder for the costs of defense.

Since the policy at hand contained a clear duty to inform the insurer of an accident giving rise to liability, the court concluded that the insured was a primary insurance coverage provider rather than an excess coverage provider.

If you were involved in an accident, you likely have questions about your right to compensation and whether you are entitled to insurance coverage. At Therman Law Offices, we have worked diligently with numerous injury victims to help them protect their rights and to ensure that they are treated fairly. To set up a free consultation with our legal professionals, call us now at 773-545-8849 or contact us online.

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