A Promise To Pay Is Just That: Two Courts Reject Insurers’ Bids To Escape Their Coverage Obligations by Complaining About Third Party Recoveries or Reductions in Liabilities
An insurer in Washington could not eliminate its coverage obligation based on its insured’s recovery from a third party. T-Mobile USA, Inc. v. Steadfast Ins. Co., et al., No. 82704-9-I, 2022 WL 17246715 (Wash. Ct. App., Nov. 28, 2022). And in an Illinois case, an insurer could not refuse to cover its insured simply because its insured was able to deduct part of its settlement payment (which the insurer had refused to cover) from its tax obligation. Liberty Ins. Underwriters, Inc. v. Astellas Pharma US, Inc., Circuit Court of Cook County, Illinois County Dept., Chancery Div., 2019 CH 14483 (Nov. 28, 2022). In both cases, the courts did not have any sympathy for insurers that refused to perform under their insurance policies in the first place and then tried to take advantage of their insureds’ recoveries or reductions in liabilities. And the courts were intent on holding the insurers to the plain language of the policies and the promises they had made to the insureds. Read the full Policyholder Perspective blog post here.