Insurance Claim Duty to Defend.

Byline: Derek Hawkins

7th Circuit Court of Appeals

Case Name: United Fire & Casualty Company v. Prate Roofing & Installations, LLC,

Case No.: 19-3043

Officials: SYKES, Chief Judge, and HAMILTON and SCUDDER, Circuit Judges.

Focus: Insurance Claim Duty to Defend

The questions in this appeal arose from a fatal on-the-job accident on a commercial roofing project. The central question is whether a liability insurer for a roofing contractor owed a duty to defend another roofing contractor that was an "additional insured" under its policy. The policy covered the "additional insured" only for any vicarious liability it might incur as a result of actions or omissions by the named insured.

The insurer argues that because its named insured was an independent contractor, Illinois law would notcould not impose any liability on the additional insured, so that there was no risk of covered liability and thus no duty to defend. The district court rejected this reasoning. The court explained that the duty to defend depends on the claims the plaintiff asserts, not on their prospects for success. We agree. A liability insurer's duty to defend applies to impose a duty to defend allegations potentially within the policy's liability coverage, regardless of predictions about prospects for success. The duty to defend applies even to hopeless suitswhether they are unfounded, false, or fraudulent. E.g., General Agents Ins. Co. v. Midwest Sporting Goods Co., 215 Ill. 2d 146, 155, 828 N.E.2d 1092, 1098 (Ill. 2005); Pekin Insurance Co. v. Centex Homes, 72 N.E.3d 831, 839 (Ill. App. 2017). By that logic, the duty to defend extends even to allegations seeking to impose liability that would require a dramatic change in the law.

In this case, the plaintiff's allegations in the underlying complaint were broad enough to include claims against the additional insured that potentially fall within the scope of coverage for vicarious liability. Regardless of...