Homeowner’s Consumer Fraud Act Claim Against Insurance Company Allowed to Proceed Despite Insurance Code.

In Burress-Taylor v. American Security Insurance Company, the plaintiff’s home was damaged by fire.  She had two insurance policies, both of which covered loss by fire.  Unfortunately, the shared liability of the two insurance companies was in dispute, and neither company would fully compensate her for her loss. 

The plaintiff filed a class action complaint against both insurance companies alleging breach of contract and deceptive conduct in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”). The trial court dismissed the plaintiff’s complaint, finding that the Consumer Fraud Act claim was preempted (e.g., trumped) by section 155 of the Illinois Insurance Code (“Insurance Code”), which provides that policyholders may seek recovery of not only compensatory damages, but attorneys’ fees also, where an insurance company’s refusal or delay in paying a claim is “vexatious and unreasonable.”

The Appellate Court reversed the trial court, finding that because well-established torts require proof of different elements and address insurer misconduct that is not merely vexatious and unreasonable, section 155 was not intended to insulate insurers from such tort actions.  The court recognized, however, that mere allegations of bad faith or unreasonable and vexatious conduct, without more, do not constitute a separate and independent tort and such allegations are preempted by section 155.  In this case, the court ruled that plaintiff’s complaint properly stated a Consumer Fraud Act claim that was separate and independent of her breach of contract claim and therefore was not preempted by section 155 of the Insurance Code.  To read the appellate court’s opinion, click here.

The attorneys at DeBlasio & Donnell are knowledgeable in consumer fraud and insurance litigation matters.  To contact our law firm, call us Toll Free at (877) 646-9245 or via our website at http://dd-lawfirm.com/contact.php.

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