The Business Litigation Blog

What Are Your Options When Your Commercial Insurer Will Not Pay Your Claim In Illinois?

Suppose you own a small business just outside of Chicago.  It is a small retail establishment and you have been operating it for about 5 years.  Business is good and you have a clientele that is loyal to you for a number of good reasons.  You are fully licensed as required by law and you make sure you pay your liability insurance on time every month. 

One day, however, a client slips and falls on a broken tile and is seriously injured.  You feel terribly for the client and you jump through all the hoops your insurance company has put in place regarding the claim.  Unfortunately, your insurance company refuses to pay the claim.  They argue that you failed to maintain the property and they are therefore not obligated to pay out to your client.  You implore them to pay and note that you inspected the floor only 2 or 3 days before.  They still refuse.  Your customer wants to know who is going to pay their medical bills and they are considering suing you and your insurance carrier.  What do you do?

 

Avenues Of Recovery

In the above situation, you have three ways to go about trying to get your insurance company to pay up.  First, and the area of our concern in this article, is to sue them for breach of contract.  Second, you can file a claim under the Illinois Consumer Fraud Act.  Finally, you can pursue a tort action against them for fraud.

 

Breach Of Contract

An insurance contract is a unique type of contract under the law.  You are essentially paying another entity to protect you against the claims of a third party.  What’s more, if you are, in fact, sued by another party, the insurance company typically moves in as a surrogate in your place and defends your interests and is usually empowered to approve or deny settlement offers.  Because of the position the insurance company occupies, some courts in Illinois recognize a cause of action in insurance contract cases called breach of an implied duty of good faith and fair dealing.  This simply means that in dealing with a third party claim (your injured customer) against an insured (you), an insurance company is required to act in your best interests regardless of the actual terms written into your insurance policy or contract. You are often only allowed to recover the damages under this theory that you would be able to under a regular breach of contract case.

Illinois law provides an additional avenue of relief that is found in Section 155 of the Insurance Code.  This section allows some additional relief where an insured can prove that the delay or denial on the part of the insurance company was vexatious and unreasonable.

Insurance companies have the means to fight in court.  If you choose the right attorney, though, you, too, can have a great deal of legal firepower to help you against a recalcitrant insurance company, especially because Section 155 allows the court to make the insurance company pay your attorney fees upon a finding of bad faith.

The attorneys at the Patterson Law Firm have decades of experience helping business owners when insurance companies do not make good on their policies.  It is a complex field of law and experience can make a huge difference.  If you are business owner in the Chicago area and are having insurance difficulties, please call us at (855) 875-3552 to set up your initial consultation.  Put more than 120 years of experience to work for your business today.

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