Illinois State Bar Assoc. Mutual Ins. Co. v Beeler Law, P.C.

2015 IL App (1st) 140790-U (Ill. App., 2015)

Words & Phrases

Claims Made Policy

Trial Judge

Kathleen Pantle

Appellate Judge

Lavin

Holding

Insured failed to give insurer notice of potential claims during the policy period.

Fact Summary

Here, it is undisputed that defendants failed to comply with the notice requirements under Condition N of the Policy. Beyond Beeler's deficient email, the record demonstrates that the first actual notice to plaintiff was almost seven months after the Policy's term ended when defendants tendered plaintiff the Magnum complaint.  Defendants, however, contend that plaintiff still had a duty to defend defendants; because although they failed to meet the notice requirements under Condition N, they did give general notice to plaintiff during the policy period. 

Here, defendants are essentially asking us to simply ignore Condition N, but given the clear and unambiguous language of the Policy, both parties contracted to include this notice requirement.  In addition, courts have long recognized that, where both a general and a specific provision in a contract address the same subject, the more specific clause controls.  See Grevas v. U.S. Fidelity and Guar. Co. 152 Ill. 2d 407, 411 (1992).  Therefore, ignoring the specific notice provision would be an unreasonable construction of the policy.  Furthermore, since the purpose of a claims-made policy is to allow the insurance company to know in advance the extent of its claims exposure and compute its premiums, it requires that claims be reported during the policy period and defendants failed to meet the agreed upon notice requirements.  See Uhlich Children's Advantage Network v. National Union Fire Co. of Pittsburgh, PA, 398 Ill. App. 3d 710, 716 (2010).  We note that unlike lay persons, as attorneys, defendants have sophistication in commerce and insurance matters, and as such, should have had a clear understanding of their contractual obligations and reporting requirements under the Policy. 

Moreover, it is clear that Condition N was intended to be a condition precedent, not a mere promise, under the Policy.  Condition N is located in the "Conditions" section of the Policy and its unambiguous language specifically reads "as a condition of insurance coverage." 

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