Bad Faith Insurance Claims in Illinois

Bad faith on the part of insurance companies does happen in Indiana and Illinois, but it is not always as easy to prove a bad faith case here as it may be in other states. See, e.g., Asmat, D. P. and Tennyson, S. (2014), Does the Threat of Insurer Liability for “Bad Faith” Affect Insurance Settlements?. Journal of Risk and Insurance, 81: 1–26. doi: 10.1111/j.1539-6975.2012.01499.

In Illinois

For instance, in Illinois there is a specific set of statutes (see, e.g., 215 Ill. Comp. Stat. 5/155 (“Section 155”)), that determines the rights and remedies for victims of bad faith actions by an insurance company where the carrier drags its heels about settling the case.

This law covers bad faith insurance cases that arise in Illinois. There is not a separate common law tort claim for insurance bad faith in Illinois because the Illinois legislature has acted to create laws that control this issue. See, Cramer v. Insurance Exchange Agency, 675 N.E.2d 897, 174 Ill. 2d 513, 221 Ill. Dec. 473 (1996).

This law includes a provision that allows for attorneys’ fees to be paid by the insurance company who has been found guilty of bad faith in refusing to settle in order to help victims of bad faith get justice (by making the bad faith carrier pay their legal expenses as part of the award). See, Cramer at pp. 520-521.

Section 155 states, in part, that:

(1) In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 60% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs;
(b) $60,000;
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.

If the harmed accident victim does not properly file his bad faith insurance claim in accordance with the Illinois bad faith claims laws, then he will likely face a successful motion by the insurance carrier to have the case dismissed “for failure to state a claim.” See, Powell v. American Service Ins. Co., 7 N.E.3d 11 (Ill. App. Ct. 2014).

If you believe you might have a case, it is crucial you contact a qualified attorney immediately. Contact The Lockwood Legal Group for a free consultation today! You can call our office phone, cellular phone, or send us an email.


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