Lexington Insurance Co. v. Horace Mann Insurance Co.

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Drake was involved in a car accident with Burley, who offered to settle the matter with Drake’s automobile insurer, Horace Mann Insurance. The offer expired before Horace Mann accepted it, however, and Burley sued Drake and sent a letter to Drake’s lawyer suggesting that Horace Mann had handled the matter in bad faith. Believing that this letter constituted a “claim” against Horace Mann for extra-contractual damages that had accrued before the start date of Horace Mann’s own insurance policy with Lexington Insurance, Lexington sought a judicial declaration that it had no duty to indemnify Horace Mann under that policy. Horace Mann counterclaimed for breach of contract and requested (pursuant to an Illinois statute) additional damages for “vexatious and unreasonable” claims-handling. Horace Mann also filed a third-party complaint against its insurance broker, Aon, for negligence in reporting the extra-contractual “claim” to Lexington. The district court rejected Lexington’s suit on summary judgment and awarded judgment as a matter of law to Lexington and Aon on Horace Mann’s claims. The Seventh Circuit affirmed. View "Lexington Insurance Co. v. Horace Mann Insurance Co." on Justia Law