Every lawyer who claims to have experience with insurance coverage litigation knows that there is a difference between the duty to defend and the duty to indemnify. If the complaint filed against the insured sets forth a covered claim, the insurance company will owe a duty to defend (paying an attorney and the costs of the litigation) even if the facts ultimately show that there is no duty to indemnify (pay a settlement or a judgment if the insured loses the case). A recent case from the Appellate Court of Illinois, First District, American Access Casualty Co v. Novit, et al, recently explained these concepts in a well-reasoned opinion, but might be more interesting for a point of civil procedure.
The insurance company presented two reasons why it did not owe a defense. The trial court disagreed with one of them but agreed with the other. On appeal, the insurance company only argued the reason with which the trial court agreed, overlooking its right to argue any reason that would sustain the trial court’s decision. When the appellate court disagreed with the trial court’s rationale for denying the insured a defense, it would not consider the other argument because it had not been raised by the insurance company.
In holding that the insurance company owed a defense, it issued no ruling on whether the insurance company would ultimately owe indemnity.
For a copy of the decision or if you have a question about insurance coverage, get in touch with Thomas E. Patterson at (312)-223-1699 or at firstname.lastname@example.org. Mr. Patterson’s discussion of indemnity can be found on the National Business Institute’s (NBI) website.