In Charter Properties, Inc., et al. v. Rockford Mut. Ins. Co., 2018 Ill.App.(2d)17037, the Second District concluded that the delay in settling the insured’s claim was vexatious because there was no bonafide dispute about coverage.
The insured owner of a commercial building, submitted a claim for loss of building and lost business income following a structural collapse. The insurer made a few payments and ultimately held the insured’s claim in abeyance until it completed its investigation of the damages arguing that the insured’s proof of loss was excessive. At trial, the insurer’s representative testified that he stopped working on the file without completing the inspection and estimate of damages approximately one year after the claim was filed.
The court recognized that Section 919.50 of the Administrative Code requires an insurer to affirm or deny liability on a claim within a reasonable time and to offer payment within 30 days after the affirmation of liability, if the amount of the claim is determined and not in dispute. For those portions of the claim that are not in dispute and for which the payee is known, the insurer shall tender payment within said 30 days. On first party claims, if a settlement offer is less than the amount claim, or if the claim is denied, the insurer shall provide to the insured a reasonable written explanation of the basis of the lower offer or denial within 30 days after the investigation and determination of liability is completed. The explanation shall clearly set forth the policy definitions, limitations, exclusions or conditions, which the lower offer or denial was based.
The parties disagreement over the insured’s proof of loss statement required the insurer to provide a reasonable written explanation within 30 days after the investigation and determination of liability was completed. Here, the insurer neither offered a written explanation for denial nor completed the investigation and determination of liability. Evidence of such improper claims practices was found by the court to support a Section 155 claim.