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Since the Illinois Supreme Court’s ruling that class actions alleging violations of the Illinois Biometric Information Privacy Act (“BIPA”) trigger general liability coverage, the focus of BIPA coverage litigation has shifted to the applicability of three exclusions often found in general liability policies: (1) the Employment Related Practices exclusion, (2) the Violation of Statutes exclusion, and (3) the Access or Disclosure exclusion.  Although the first quarter of 2022 brought a mixed bag of opinions, with four out of seven resulting in a finding of coverage, the scorecard with respect to each specific exclusion tells a different story that generally favors the policyholders.  As outlined in this blog post, insureds facing BIPA lawsuits therefore have plenty of reason to continue pressing their insurers for coverage.

Employment-related practices exclusions

The Employment-Related Practices exclusion bars coverage for bodily injury or personal and advertising injury to a person arising out of any of the following:

  • Refusal to employ that person
  • Termination of that person’s employment
  • Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, or discrimination directed at that person

In coverage disputes arising out of employment-based BIPA class actions, the issue is whether the conduct at issue is an employment-related practice that falls within the third prong of the exclusion.

As outlined in a previous blog post, there is case law outside of the BIPA context standing for the proposition that the phrase “employment-related” has a narrow meaning and only refers to matters that concern the employment relationship itself. According to this line of case law, where the conduct at issue in a lawsuit does not arise out of personnel management or employee discipline (i.e., the employment relationship), but instead merely happens to involve an employee, the third prong of the exclusion does not bar coverage.Continue Reading Recent opinions provide support for insureds seeking coverage for BIPA claims

Businesses with liability insurance coverage governed by Illinois law should be mindful to take advantage of Illinois’ “targeted tender” rule, which provides insureds a unique strategy for maximizing insurance recoveries for claims triggering multiple different policies. This rule recognizes an insured’s right to “target tender” one or more concurrent insurance policies from a group of policies that potentially apply to a claim against the insured, regardless of insurer efforts to offset their insuring obligations through “other insurance” or contribution.  Kajima Constr. Svcs., Inc. v. St. Paul Fire & Marine Ins. Co., 227 Ill.2d 102 (2007); John Burns Constr. Co. v. Indiana Ins. Co., 189 Ill.2d 570 (2000). Once an insured targets its tender to a particular insurer, “[t]hat insurer may not in turn seek equitable contribution from the other insurers who were not designated by the insured,” who may knowingly forgo an insurer’s involvement. John Burns, 189 Ill.2d at 575.

Illinois insureds can “target tender” away from policies with high retentions or deductibles

The “targeted tender” rule thus is particularly powerful for insureds trying to avoid or minimize the amount of risk they must absorb from “fronting” coverage or policies with substantial self-insured retentions or deductibles. For example, assume a construction company is sued in a wrongful death lawsuit after one of its truck drivers hauling heavy equipment to a job site runs over a pedestrian. The underlying complaint alleges liability triggering the construction company’s commercial auto coverage, which provides dollar-one defense coverage outside of policy limits, as well as the company’s professional liability coverage, which is subject to a $2 million retention before any coverage attaches.  After the construction company notifies both insurers of the lawsuit, they agree to split the insured’s defense costs 50/50, but the professional liability insurer refuses to reimburse any of its 50% share of the defense costs until the $2 million retention has been satisfied. Working with knowledgeable coverage counsel, the insured construction company can obtain a fully funded defense of these lawsuits by “targeting” its tender solely to the commercial auto insurer.Continue Reading “Illinois’ ‘targeted tender’ rule – a powerful strategy for insureds to select and deselect triggered policies to maximize coverage