Court Says Umbrella Insurer Has No Duty to Settle When Primary Insurer Controls Defense
Kevin Fox v. Will County State's Atty. (N.D. Ill.)
BatesCarey LLP's client issued an excess policy to an insured county, which was sued, along with two sheriff deputies, for civil rights violations by a man falsely accused of murder. The primary insurer paid for the county's and deputies' defense, which resulted in an uncovered multi-million dollar punitive damage award. The insured's assignee argued that the excess insurer had failed in bad faith to accept a settlement offer and was required to pay the punitive damage award. BatesCarey LLP argued that the excess insurer did not control the defense and thus could not have breached any duty to settle. An Illinois federal court adopted BatesCarey LLP's reasoning on summary judgment and held that the excess insurer was not obligated to pay the punitive damage award.