USA – ILLINOIS Trends and Developments Contributed by: Everett J. Cygal, Daniel J. Schufreider, Jasmine K. Dela Luna, Sarah M. Oligmueller and Christopher L. Gerardi, ArentFox Schiff LLP
PMC Cas. Corp. v Virginia Sur. Co., Inc., No 24 C 7795, 2025 WL 2962523 (N.D. Ill. Oct. 19, 2025) The insurance company parties in this complex rein- surance dispute have reached a settlement in princi- ple, while a third party is in the process of appealing the District Court’s denial of its motion to intervene in the case. Protect My Car, which sold a form of extend- ed vehicle warranties, obtained insurance from Vir- ginia Surety, which in turn entered into a reinsurance agreement with PMC Casualty to reinsure its own obli- gations to Protect My Car. In exchange, PMC Casualty was to receive any net positive reserves created by the service contracts, including any surplus premiums Virginia Surety received as a result of a service con- tract being cancelled mid-term. PMC Casualty Corp. filed this federal action accusing Virginia Surety Corp. of failing to pay some USD20 million in allegedly owed reserves. At the same time, third-party Paylink Pay- ment Plans Inc. sued Protect My Car and Virginia Surety in state court, alleging that Protect My Car failed to repay PayLink for its financing of the underly- ing vehicle contracts. PayLink also moved to intervene in the federal District Court case, but the District Court denied its request. That motion to intervene is now on appeal and pending before the Seventh Circuit. But in the meantime, PMC and Virginia Surety have notified the court that they have entered into a settlement in principle. That settlement, and potential dismissal of the action, may moot the current pending appeal.
not been physically altered nor rendered “completely uninhabitable”, meaning that coverage was not avail- able. Applying this reasoning and predicting that the Illinois Supreme Court would follow Sandy Point, the District Court held that the plaintiffs’ claims against Society failed under Illinois law. ISMIE Mut. Ins. Co. v Pergament, 2025 IL App (1st) 230787 (June 16, 2025) This coverage dispute arose from the settlement of an underlying negligence action brought by Taryn and Doug Kessel against their medical provider, Eugene Pergament, MD. Dr Pargament’s insurer, ISMIE Mutual Insurance Company (ISMIE), commenced this sep- arate lawsuit seeking a declaration that it owed no indemnity in connection with the settlement because the settlement agreement did not actually require Dr Pergament to pay anything to resolve the Kessels’ underlying lawsuit. Rather, the settlement called for Dr Pergament to assign his rights under his ISMIE policy to the Kessels. The policy provided that ISMIE would pay any amounts the insured was “legally obligated to pay as ‘damages’ because of any ‘claim’ against the ‘insured’”. The trial court entered summary judg- ment in favour of ISMIE, and the Illinois Appellate Court affirmed, holding that ISMIE owed no indem- nity obligation for the settlement of the underlying lawsuit based on the language of the policy, because the insured was not actually “legally obligated” to pay anything under the terms of the settlement.
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