What it does
IL 01 62 applies to Illinois policies. It adds a provision to every insuring agreement that sets out a duty to defend. These include the CGL, umbrella, employment practices, farm, liquor, OCP, pollution, products, product withdrawal, medical professional, railroad protective and underground storage tank coverage parts, the auto dealers, business auto and motor carrier forms, Coverage A of the Legal Liability Coverage Form, and Coverage C (Mortgageholder's Liability) of the Mortgageholders Errors and Omissions Coverage Form.
If the insurer initially defends an insured, or pays for the defense, but later determines the claim is not covered, it has the right to reimbursement of defense costs. That right applies only to defense costs incurred after the insurer notifies the insured in writing that there may not be coverage and that it reserves the right to end the defense and seek reimbursement.
Why it matters
The endorsement gives the insurer an express contractual right to recover defense costs on uncovered claims. That right is limited to costs incurred after the written reservation-of-rights notice.
Quoting and selling notes
- When an Illinois client receives a reservation of rights letter, explain the possible reimbursement exposure and consider independent counsel.
- Policies show both 09 08 and 10 13 editions in use.
