In a split decision, the Illinois Supreme Court in Am. Family Mut. Ins. Co. v. Krop, 2018 IL 122556, 120 N.E.3d 982, reh’g denied (Nov. 26, 2018) held that in a negligent failure to procure lawsuit against an insurance agent, the applicable statute of limitations began to run under Illinois law when the insureds received the policy rather than when the insurance company denied coverage. In so holding, the Supreme Court held that the suit against the agent sounded in negligence, which was a tort claim arising out of a contractual relationship. The contract was breached when the agent procured a policy that did not provide the requested coverage. The Court found that the discovery rule was inapplicable because the insureds had an obligation to read and understand their own policies. In the decision, the Court emphasized that requiring customers to read their insurance policies was reasonable because customers know the coverage that they want. Such a rule also incentivized customers to act in good faith. On the other hand, the Court noted that a contrary rule would allow customers to maintain defective policies for many years and assert the defect after potential evidence supporting the insurer may have been lost.
