An insurer has no responsibility to defend the tenants of an insured property towards a third-party negligence contribution declare, the Illinois Supreme Courtroom dominated Monday.
In a unanimous choice, the state excessive courtroom reversed the Third District Appellate courtroom and reinstated a choice by the Circuit Courtroom. The courtroom rejected the Appellate Courtroom’s interpretation of a 1992 Supreme Courtroom choice to imply that tenants are at all times “implied co-insureds” underneath their landlord’s property insurance coverage coverage.
Monroe and Dorothy Sheckler rented a residence in Pekin, Illinois from Ronald McIntosh. The lease settlement required McIntosh to offer property insurance coverage for the premises solely and acknowledged that the Shecklers have been liable for any insurance coverage for his or her possessions. An indemnification clause within the coverage excluded McIntosh for legal responsibility for any injury occurring on the premises.
In August 2015, McIntosh employed a service technician to repair the gasoline range on the residence. Wayne Workman inspected the range and left the property to acquire an element he wanted to make the restore. After he left, the Shecklers smelled gasoline. They sprayed deodorizer to masks the oder.
Monroe Sheckler turned on the range, which ignited and sparked a hearth that precipitated substantial property injury. McIntosh’s insurer, Auto-Homeowners Insurance coverage Co., paid for the injury and misplaced rental revenue.
Auto-Homeowners filed a subrogation motion towards Workman in Tazewell County to recoup its prices. Workman, in flip, filed a third-party criticism towards the Shecklers for negligent contribution. Finally, a jury returned a verdict in favor Workman.
Earlier than the decision, the Shecklers requested Auto-Homeowners to defend and indemnify them. After the insurer refused, they filed a lawsuit asking for a declaratory judgment from the Tazwell County courtroom that Auto-Homeowners has an obligation to defend and indemnify them from the third-party contribution declare.
The trial courtroom granted Auto-Homeowners’ movement for abstract judgment, discovering the insurer had not responsibility to defend the couple. The Shecklers appealed.
The Third District Appellate Courtroom reversed the Circuit Courtroom in a break up choice. The courtroom’s majority opinion discovered {that a} 1992 Supreme Courtroom choice in Dix Mutual Insurance coverage Co. v. LaFramboise had established that tenants are coinsured underneath their landlord’s property insurance coverage coverage.
The Supreme Courtroom mentioned the Dix choice was a subrogation motion that doesn’t apply to the Shecklers’ case as a result of no “equitable rules” are at concern.
“Thus, this courtroom’s holding in Dix is just not related right here the place the difficulty is just not one in every of subrogation however whether or not Auto-Homeowners owes an obligation to defend or indemnify the Shecklers towards Workman’s third-party contribution declare,” the opinion says.
The courtroom famous that the insurance coverage coverage that Auto-Homeowners issued to McIntosh listed solely McIntosh and his spouse as the one named insureds.
“Accordingly, as a result of the Shecklers should not lined insureds underneath the coverage, they aren’t entitled to the protection and safety afforded by the coverage,” the courtroom concluded.
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