Illinois Supreme Court Approves the Targeted Tender
The Supreme Court Approves The Expansion Of Institute Of London.The supreme court reviewed Institute of London again in John Burns Const. Co. v. Indiana Ins. Co., 189 Ill.2d 570, 727 N.E.2d 211, 244 Ill.Dec. 912 (2000). In John Burns, John Burns Construction Company entered into a subcontract agreement with Sal Barba Asphalt Paving, Inc., in which Barba was required to maintain liability insurance in favor of Burns. Barba named Burns as an additional insured under its policy with Indiana Insurance Company. An individual slipped and fell in the parking lot that Barba had paved and brought suit against Burns and others. Burns informed Barba of the suit and asked that the suit be tendered to Indiana Insurance Company. Within its letter, Burns stated that it looked solely to Indiana for defense and indemnification and, although it had notified its insurer of the action, it did not want its insurer to become involved in the suit. Burns also sent a copy of this letter to its insurer. John Burns, Ill.2d at 571, N.E.2d at 213.
Indiana denied the tender alleging that the injury occurred outside the period of the contract for the paving work. Burns then sought a defense from its own insurer, Royal. A declaratory action was brought by Burns and Royal against Indiana seeking a declaration that Indiana was responsible for the sole duty to defend and indemnify Burns. Id., Ill.2d at 572 N.E.2d at 213. Indiana acknowledged that it had a duty to defend and indemnify Burns, but also maintained that Royal was required to share in that duty based upon Indiana’s “other insurance” clause. Id., Ill.2d at 572, N.E.2d at 214. While relying upon Cincinnati Cos. v. West American and Institute of London, the supreme court held that John Burns had the right to determine whether it wished to trigger one of several potential insurers to the exclusion of the non-triggered insurers. John Burns Const. Co. v. Indiana Ins. Co., 189 Ill. 2d 570, 578, 727 N.E.2d 211, 217, 244 Ill. Dec. 912, 918 (2000). Since Burns expressly declined to invoke its own coverage with Royal, that insurance was not triggered and was therefore, not “available.” Id. As a result, Indiana was required to defend and indemnify Burns and was foreclosed from seeking contribution from Royal.
The supreme court also reviewed whether Indiana could rely upon the language contained within its “other insurance” clause to trigger coverage under a policy issued by another insurer which was not triggered by the insured and thus, not available. The supreme court in John Burns held that an insurer “may not take advantage of the other insurance provision in its policy.” John Burns, Ill.2d at 578, N.E.2d at 217. The court held that insurance provided by the non-triggered policy “was not ‘available,’ in the language of the other insurance provision, for Burns had expressly declined to invoke that coverage. Moreover, we do not believe that the presence of the ‘other insurance’ provision in the Indiana policy serves by itself to trigger the coverage afforded by [the non-triggered] policy. An ‘other insurance’ provision does not in itself overcome the right of an insured to tender defense of an action to one insurer alone.” Id.
