SNR Denton US LLP on Illinois School District Agency v. The St. Charles Community Unit School District 303: Illinois Appellate Court Rejects “Selective Tender” Rule for Chronologically Consecutive Insurance Policies

SNR Denton US LLP on Illinois School District Agency v. The St. Charles Community Unit School District 303: Illinois Appellate Court Rejects “Selective Tender” Rule for Chronologically Consecutive Insurance Policies

Daniel Feinberg   By Daniel E. Feinberg, Counsel, SNR Denton

In Illinois School District Agency v. The St. Charles Community Unit School District 303, 2012 Ill. App. LEXIS 242 (Ill. Ct. App. Mar. 30, 2012), the Illinois Appellate Court held that Illinois' "selective tender" rule does not apply in cases involving chronologically consecutive insurance policies.  Accordingly, the "selected" insurer was entitled to seek equitable contribution for defense and indemnity from the insured's prior insurers.  This commentary examines that case and its significance in situations where policyholders seek coverage for long-term progressive injuries under many years worth of consecutive insurance policies.

The commentary summarizes the decision as follows:

The Appellate Court ... conclud[ed] that "[t]he Illinois Supreme Court has never approved extending this uncommon right [to "selectively tender"] to chronologically consecutive insurance policies."  Instead, the Court observed that all Supreme Court precedent on the "selective tender" rule involved "circumstances where concurrent primary insurance coverage exists" -- i.e., coverage that is in effect at the same time -- and thus, it was bound to "tread with caution" because application of the "right" to "selectively" tender "falls outside of the circumstances previously approved by our supreme court."  The Court reasoned further that "[t]he policy grounds underlying the selective tender rule" -- i.e., "the insured's fear that premiums would be increased or cancelled in the future" -- "do not apply to past insurers where the risk of increased premiums or the risk of policy cancellation does not exist." The Court thus held that the [insurer] was not precluded from seeking equitable contribution from the Past Insurers.  [Footnotes omitted.]

The commentary discusses the general principles underlying Illinois' unique "selective tender" rule:

Courts in Illinois have developed a "selective tender" rule, pursuant to which an insured covered by multiple concurrent primary policies is permitted to choose which of those policies should respond to a covered claim.  The selected insurer is liable for all defense and indemnity expenses (up to the policy limits) and is prohibited from seeking contribution from other insurers, regardless of what the "other insurance" clauses in the policies might provide.

The commentary discusses the impact of the decision on cases where a policyholder seeks coverage for long-term progressive injuries under years worth of successive insurance policies, and suggests that this could be the "beginning of the end" for the "selective tender" rule.

Daniel Feinberg is a member of SNR Denton's Litigation practice concentrating on the representation and counseling of insurance companies in disputes and litigation regarding the extent or availability of insurance coverage. He has represented insurers in actions filed throughout the U.S. and in a variety of insurance coverage contexts.  These include coverage disputes relating to environmental contamination, asbestos exposure, mass tort liability, products liability, professional liability, premises liability, civil rights and claims under the Federal Employers' Liability Act. In addition to his insurance coverage practice, Dan has extensive experience representing insurers in direct action lawsuits.

Mr. Feinberg received his J.D. from Loyola University of Chicago in 1999 and earned a B.A. from Indiana University in 1996. He is admitted to the bar in Illinois and Washington and is a member of the American Bar Association, the Chicago Bar Association, the Illinois State Bar Association and the State Bar of Wisconsin.

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