Insured Prevails In Coverage Fight With Progressive Insurance

PROGRESSIVE DIRECT INSURANCE COMPANY v. JUNGKANS, Ill: Appellate Court, 2nd Dist. 2012 - Google Scholar:

This case was recently decided by the Illinois Appellate Court, Second District.

The defendant, Kyle Jungkans, was seriously injured in a motor vehicle accident, while he was riding in a car driven by Billy Watts.

Jungkans settled with State Farm, Watts' insurer, for the policy limits, then sought underinsured motorist coverage under his policy with Progressive Direct.  Progressive denied coverage on the basis that Jungkans' failure to give notice to Progressive before the settlement violated the cooperation clause.  The trial court granted Progressive summary judgment, but the Appellate Court reversed.

Jungkans conceded that he violated the Progressive policy by failing to give notice to Progressive.  However, Progressive was not prejudiced by the settlement because Watts was judgment proof at the time of the accident.  Moreover, Progressive was aware of its subrogation rights before Jungkans entered into the settlement with State Farm.

The Court explains:

As to the knowledge issue:

"¶ 19 We agree with defendant that there is no genuine dispute that State Farm knew in advance of the settlement that plaintiff had a subrogation right against Watts and that this was sufficient to defeat the invocation of the cooperation clause. Bell said plainly that she knew in advance of plaintiff's subrogation right. Although this statement was a conclusion, it hardly required elaboration; Bell would have known whether she had been aware of plaintiff's subrogation right, a routine fact of insurance litigation. Under the case law, that was sufficient. Thus, there is no genuine issue of fact as to whether plaintiff retained its subrogation right, especially as, per Richter, it was ultimately plaintiff's burden to prove that defendant's settlement cut off that right."


As to the prejudice issue, there was no prejudice because the defendant in the underlying case was judgment proof.


"¶ 25 Numerous jurisdictions have held that an insurer may not rely on a technical violation of a cooperation clause to deny coverage if the tortfeasor with whom the insured settled was judgment-proof."


The opinion cites the many cases siding with the insured.


Edward X. Clinton, Jr.


www.clintonlaw.net



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