Wagner v. Certain Underwriters at Lloyd's London

Summary

The Illinois Appellate Court, First District, reviews a dispute over an increased lump-sum disability benefit under an Automatic Benefit Increase Endorsement. The court concludes that the insured proved the endorsement's conditions for an increased benefit were satisfied, but the trial court's calculation of the increased amount was excessive. The order indicates that the judgment was affirmed in part and reversed in part; the provided text ends during the court's analysis of the benefit calculation.

Holdings

1. Wagner proved by a preponderance of the evidence that, before he went on claim, the insurer received and agreed to documentation showing that his earned income increased from $1,330,276 to $1,350,000. He was therefore entitled to an increased Principal Sum Amount.
2. The omission of a calculation formula was a missing essential term, not an ambiguity requiring selection of the interpretation most favorable to the insured. The court was required to supply a reasonable calculation, and the only reasonable calculation was to apply the policy's existing 65%-of-income formula to the $19,724 increase in annual income over the remaining 156-month period, producing an increased benefit of $166,608.
3. The insurer forfeited its argument that the policy was surplus-line insurance exempt from sections 357.9 and 357.9a because it first raised that theory after trial in objections to the proposed final order.
4. The judgment awarding prejudgment interest at 9% per annum under sections 357.9 and 357.9a of the Illinois Insurance Code was affirmed.

Questions Presented

1. Whether the evidence established that Wagner satisfied the endorsement's conditions for an increased Principal Sum Amount.
2. Whether the absence of a formula for calculating the increased Principal Sum Amount made the endorsement ambiguous and entitled Wagner to the most favorable proposed calculation.
3. Whether the insurer forfeited its argument that the policy was surplus-line insurance exempt from the Illinois Insurance Code's 9% prejudgment-interest provisions.
4. Whether the trial court correctly awarded prejudgment interest under sections 357.9 and 357.9a of the Illinois Insurance Code.

Disposition

reversed_and_remanded