The insureds survived their broker's motion to dismiss their claims for negligent procurement of insurance. Thanoukos v. Kita, 2017 Ill. App. Unpub. LEXIS 2684 (Ill Ct. App. Dec. 19, 2017).
The insureds purchased homeowners insurance through their broker. When they sustained water back-up damage in their home due to a sump pump failure after an electrical outage, their insurer, Allstate denied the claim. The policy excluded damage for floods and back up water due to sump pump failure.
The insureds sued, alleging that the broker assured them that their residence was "fully covered" from the policy's inception and that the policy would provide full coverage for damage, including a loss as a result of water.
The broker moved to dismiss, arguing the claim was time-barred because it was not filed within two years of the date on which the insureds received their policy. The trial court agreed the suit was untimely and granted the motion to dismiss.
The appellate court reversed. The discovery rule applied, tolling the statute of limitations until the insured knew or should have known that the policy did not provide the desired coverage, which was typically when the insurance company denied the claim.
Further, an insured's failure to read the policy when issued was not contributory negligence as a matter of Illinois law, so the dismissal of the complaint was improper. Illinois recognized that a broker was a fiduciary of the insured and was under an obligation to exercise competence and skill when rendering the service of procuring insurance. Consequently, the broker could be liable for damage caused when the policy obtained was materially defective through the broker's fault. There was nothing in the record here to show that the insureds knew of the lack of coverage for water damage before Allstate denied their claim.
