Old Second National Bank v. Indiana Insurance Company, 29 N.E.3d 1168

Old Second National Bank sought coverage from Peerless for a burglary/vandalism loss to Swissland’s vacant building under a mortgagee clause.
The initial and renewal Peerless policies defined vacancy and excluded losses after 60 days of vacancy; the 60-day vacancy period preceded the loss.
Assurance processed Brothers’ application for Peerless and issued an evidence document naming Old Second as mortgagee without Old Second’s direct involvement.
The building had been vacant since 2005; the loss occurred December 8, 2009, with extensive theft and vandalism totaling about $2.27 million.
Peerless denied coverage based on vacancy; Old Second asserted the mortgage clause required payment regardless of the insured’s vacancy, and sought prejudgment interest if appropriate.
The circuit court granted summary judgment for Old Second on coverage under the mortgage clause and later awarded prejudgment interest; Peerless appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the standard mortgage clause requires coverage for the loss despite vacancy defenses.	Old Second argues mortgagee right to coverage survives vacancy denial.	Peerless contends vacancy exclusion governs and defeats coverage.	Yes; mortgagee coverage applies under standard clause despite vacancy.
Who bears burden to prove coverage given vacancy terms and mortgage clause.	Insurer bears burden to show exclusion applies; insured bears burden to prove loss is covered.	Old Second’s vacancy does not trigger coverage under mortgage clause.	Insurer bears burden to prove exclusion; insured must establish covered loss first.
Whether vacancy provisions are a condition subsequent that can be reconciled with mortgagee rights.	Vacancy is a condition subsequent; mortgagee still entitled when conditions met.	Vacancy creates a noncoverage scenario that defeats mortgagee rights.	Vacancy is a condition subsequent; mortgagee rights attach if conditions are met.
Daes of prejudgment interest under the Illinois Interest Act and its relation to the mortgage claim.	Interest should accrue from denial of coverage date; amount easily determinable.	Interest should start at later dates or be tied to final judgments.	Prejudgment interest begins July 15, 2010; postjudgment interest begins July 23, 2013; termination date set accordingly.

Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (Ill. 1992) (insurance contract interpretation; summary judgment proper where no factual dispute)
Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (Ill. 1993) (construction of insurance contracts; questions of law)
Hays v. Country Mutual Insurance Co., 28 Ill. 2d 601 (Ill. 1963) (burden shifting in coverage disputes)
Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (Ill. 2010) (ambiguous terms; avoid rendering policy terms meaningless)