Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Adams v. Illinois Insurance Guaranty Fund
Citations: 407 N.E.2d 638; 85 Ill. App. 3d 867; 41 Ill. Dec. 140; 1980 Ill. App. LEXIS 3144Docket: 79-319
Court: Appellate Court of Illinois; June 11, 1980; Illinois; State Appellate Court
In the case of Delma Girlando Adams v. The Illinois Insurance Guaranty Fund, the Illinois Appellate Court addressed whether the Illinois Insurance Guaranty Fund (the Fund) is obligated to cover claims against surplus line insurers. The court concluded that it is not. Most insurance in Illinois is provided by licensed insurers, which are regulated and supervised by the state. Surplus line insurance, however, is available through brokers and agents who can procure policies from insurers not licensed in Illinois, provided they first attempt to obtain coverage from authorized companies. Surplus line insurers must designate the Director of Insurance as their agent for service of process and prove they have adequate security deposits in the U.S., but they are not otherwise regulated by Illinois. The Fund is a statutory entity designed to guarantee claims against insolvent insurers, and only licensed insurers in Illinois are members of the Fund. Surplus line carriers do not hold a certificate of authority to operate in Illinois, and thus are not members of the Fund, do not participate in its governance, nor contribute to it. The statute defines a 'covered claim' as an unpaid claim from a policy issued by a member company that becomes insolvent. Since surplus line insurers are not members, their debts are not guaranteed by the Fund. The Department of Insurance, which oversees the Fund, interprets the statute accordingly, requiring that surplus line policies include a notice stating they are issued by an unlicensed insurer and are not covered by the Fund. The court affirmed the judgment, emphasizing the clear statutory language which restricts the Fund’s obligations to member companies only. The plaintiff argues that the interpretation of the statute conflicts with its 'spirit and intent,' but the court disagrees, asserting that legislative intent should be derived from the statute's language. The court emphasizes that the legislature's intent was to exclude surplus line insurance from the coverage of the Fund, which is designed to pay claims under certain insurance policies, not all. The statute does not obligate property owners to maintain adequate insurance, indicating the plaintiff lacks a legal right to a solvent defendant. The court acknowledges the legislative goal of securing compensation for tort victims but asserts that the legislature can address issues incrementally. It also notes that only companies contributing to the Fund through premiums can benefit from it. The court references a similar ruling by the Iowa Supreme Court regarding insurance guarantee funds. The plaintiff must overcome the notice on the insurance contract indicating that the policy is not guaranteed by the Fund, either by proving the insured was not bound by the notice or that she has a superior legal position. The court finds neither argument compelling and affirms the summary judgment for the defendants.