Vedder v. Continental Western Insurance Company
2012 IL App (5th) 110583
Ill. App. Ct.2012Background
- Vedder was driving her personal vehicle as a volunteer for NWAA, which was insured by Continental; Vedder was insured by Standard Mutual for her owned vehicle.
- Kroeger sued Vedder and NWAA for injuries from a collision caused by Vedder; NWAA’s employee status could trigger respondeat superior.
- Continental issued a business auto policy to NWAA with excess coverage where Vedder was an insured but not the owner’s vehicle.
- Standard Mutual issued a policy to Vedder covering her owned vehicle and contained an other-insurance clause.
- Dispute arose over which policy provided primary coverage for Vedder and NWAA; Vedder attempted a targeted tender to Continental, claiming Continental should defend exclusively.
- Circuit court held Standard Mutual primary for both Vedder and NWAA and Continental excess; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which policy provides primary coverage for Vedder and NWAA? | Standard Mutual provides primary coverage to Vedder and NWAA. | Continental provides primary coverage for Vedder’s accident because the vehicle was not owned by NWAA and its policy language makes it excess. | Standard Mutual provides primary; Continental is excess. |
| Is Vedder’s targeted tender to Continental valid to shift primary defense to Continental? | Vedder’s targeted tender should make Continental solely responsible. | Targeted tender is invalid because horizontal exhaustion and nonpayment of premium/bargain by Vedder/precludes opting out. | Targeted tender invalid; cannot render Continental solely responsible. |
| Can Continental be estopped from asserting defenses due to delay in filing declaratory relief? | Continental is estopped by delay from raising defenses. | Continental acted promptly; no basis for estoppel. | Continental not estopped; timely defense allowed. |
| What is each insurer’s responsibility for NWAA’s defense costs? | Two primary policies should share costs; or Standard Mutual bears more. | Continental should not bear defense costs for NWAA; Standard Mutual is primary for NWAA. | Standard Mutual bears entire NWAA defense; Continental contributes nothing. |
Key Cases Cited
- Country Mutual Insurance Co. v. Teachers Insurance Co., 324 Ill. App. 3d 246 (2001) (other-insurance clause interpreted to provide excess coverage where vehicle’s owner has primary coverage)
- State Farm Mutual Automobile Insurance Co. v. Universal Underwriters Group, 182 Ill. 2d 240 (1998) (public policy and industry custom place primary liability on owner’s insurer)
- Pekin Insurance Co. v. State Farm Mutual Automobile Insurance Co., 305 Ill. App. 3d 417 (1999) (premium/payment and named insured status govern deselection of coverage)
- Kajima Construction Services, Inc. v. St. Paul Fire & Marine Insurance Co., 227 Ill. 2d 102 (2007) (horizontal exhaustion doctrine and targeting to excess insurer disallowed)
- State Auto Property & Casualty Insurance Co. v. Springfield Fire & Casualty Co., 394 Ill. App. 3d 414 (2009) (named insured premium/control importance in selecting policy coverage)
- River Village I, LLC v. Central Insurance Cos., 396 Ill. App. 3d 480 (2009) (allocation among triggered policies depends on primary/excess status)
- Chicago Hospital Risk Pooling Program v. Illinois State Medical Inter-Insurance Exchange, 397 Ill. App. 3d 512 (2010) (respondeat superior and insurer obligations context for targeted tender)
- Zurich Insurance Co. v. Raymark Industries, Inc., 145 Ill. App. 3d 175 (1986) (allocation of defense costs among multiple primary policies; independent obligations)