Jenner & Block

Insurance Law Update: "Illinois Supreme Court Holds That Insurer Must Cover Statutory Liquidated Damages"

The Illinois Supreme Court recently held that liquidated damages under the Telephone Consumer Protection Act (TCPA) were not punitive in nature, and thus could be indemnified under a commercial general liability (CGL) policy.  Standard Mut. Ins. Co. v. Lay, 989 N.E.2d 591, 599–600 (Ill. 2013).  Moreover, on remand, the appellate court held that the insurer was required to fund the settlement of a TCPA suit, even though the insurer did not consent to the settlement.  Standard Mut. Ins. Co. v. Lay, 2 N.E.3d 1253, 2014 WL 272773, at *7 (Ill. App. Ct. 2014).  This case may prove to have a significant impact on how courts determine whether damages under statutes with similar liquidated damages provisions can be indemnified and in determining whether an insurer’s consent to settlement is required.