Recently the Illinois Court of Appeals in Xtreme Protection Services, LLC v. Steadfast Insurance Co., 2019 Ill. App. (1st) 181501 N.E.3d (Ill. App. 3/3/19) found that the insurance company was required to relinquish its control of the insured’s defense and to pay for independent counsel because the complaint against the insured sought significantly more in punitive damages than in compensatory damages and the policy excluded punitive damages. The Court found that when punitive damages that are sought are disproportionately greater than compensatory damages sought, the insurance company’s interests may be advance by providing a “less-than-vigorous” defense, thereby creating a conflict of interest between the insurance company and its insured.
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