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Skaperdas v. County Casualty Insurance Company, 996 N.E.2d 766 (Illinois 4th Dist. 2013)

In Skaperdas v. County Casualty Insurance Company, 996 N.E.2d 766 (4th Dist. 2013), the Illinois Appellate Court held that the trial court erred in granting a motion to dismiss made by an insurer and broker with respect to whether an insurance agent owed a duty of care to the insured. The decision held that Section 2-2201 of the Illinois Insurance Placement Liability Act (the “Act”) no longer recognized the insurance agent-broker dichotomy for purposes of determining whether a duty of care existed. That issue will now be decided by the Illinois Supreme Court.

The parties’ dispute arose out of the failure by Lessaris, the insurance agent for the plaintiffs, to add a person to plaintiffs’ automobile insurance policy issued by County Casualty. When County Casualty denied the plaintiffs’ claim following an accident involving that person, plaintiffs sued Lessaris for negligence.

Lessaris filed a motion to dismiss, arguing that he did not owe plaintiffs a duty of care in procuring insurance coverage. County Casualty filed its own motion to dismiss, asserting that, if the trial court determined that Lessaris was not liable to plaintiffs, County Casualty could not be liable to plaintiffs for negligence under the theory of respondeat superior. The trial court granted both motions to dismiss, holding that because Lessaris was an insurance “agent,” rather than an insurance “broker,” he did not owe plaintiffs a duty of care in procuring insurance coverage for them.

In its reversal of the trial court’s ruling granting the motions to dismiss, the Appellate Court determined that Section 2-2201 of the Act eradicated the distinction between insurance agent and broker. The Act states in pertinent part:

An insurance producer, registered firm, and limited insurance representative shall exercise ordinary care and skill in renewing, procuring, binding, or placing the coverage requested by the insured or proposed insured.

The Court noted that although Section 2-2201 did not define “insurance producer,” Section 500-10 of the Illinois Insurance Act defines the term as “a person required to be licensed…to sell, solicit or negotiate insurance.” Accordingly, the Court held that a plain reading of Section 2-2201, combined with Section 500-10 of the Illinois Insurance Code, is that “any person required to be licensed to sell, solicit, or negotiate insurance has a duty to exercise ordinary care in procuring insurance.” 996 N.E.2d at 770.

On January 29, 2014, the Illinois Supreme Court granted leave to appeal. Clearly, the outcome of this appeal will have a major impact on the duties imposed upon Illinois insurance agents and their potential exposure to third party liability.

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