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R.G. Wegman Constr. Co. v. Admiral Ins. Co., 09-2022

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By FindLaw Staff on January 14, 2011 3:53 PM

Construction company's action against its insurer

R.G. Wegman Constr. Co. v. Admiral Ins. Co., 09-2022, concerned a construction company's action against its insurer claiming that it would not have been liable for damages in excess of the $1 million policy limit had the insurer discharged the implied contractual duty of good faith that insurance companies owe their insureds, in an underlying lawsuit against the construction company by an injured worker.


In reversing the district court's grant of the insurer's motion to dismiss, the court remanded the matter in concluding that, applying Illinois law, a correlative to the standard provision that authorizes a liability insurer to control the defense of a claim against the insured is the duty not to gamble with the insured's money by forgoing reasonable opportunities to settle a claim on terms that will protect the insured against an excess judgment, and here, the insurer failed to notify its insured of its knowledge that if the case went to trial, or was settled, the judgment or the settlement might well exceed $1 million.

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