Intoxication Exclusion Not Void Against Public Policy in Excess Liability Policy

The Illinois Second District Appellate Court, applying Illinois law, in an opinion by Justice Schostok, reversed a lower court ruling that found an excess policy’s intoxication exclusion was unenforceable because it was against public policy.  Instead, the appellate court reasoned that, because excess coverage is not required by Illinois law, an excess policy’s intoxication exclusion cannot be against public policy.

The underlying suit arose after John Bruen was involved in a car accident that killed Robert Crowley and injured his wife Barbara Crowley.  At the time, Bruen was driving a rental car from Enterprise while under the influence of marijuana, cocaine, and opiates.  Bruen had purchased “full coverage” insurance, which included excess Supplemental Liability Protection, from Empire Fire and Marine Insurance Company (“Empire”).  Barbara Crowley filed a complaint against Empire seeking a declaration that the excess policy provided coverage for the claims she asserted against Bruen.  However, the excess policy contained an exclusion for any claims where the insured was under the influence of drugs or alcohol.  Crowley argued the exclusion was void because it was against Illinois public policy.  The trial court agreed with Crowley, and Empire appealed.

On appeal, Crowley argued, in part, that the exclusion was void because:  (1) it was contrary to public policy, because Illinois law required insurance coverage; and, (2) enforcing the exclusion would “work a hardship upon the general public and, at the same time, benefit the rental agency and/or its insurer.” Addressing Crowley’s first argument, the appellate court agreed Illinois law requires owners and operators of motor vehicles to carry primary liability insurance coverage.  The appellate court also explained that the statute exists for the protection of the public, and, therefore, it cannot be overridden by private contractual terms.  However, the appellate court found the exclusion’s placement in an excess policy and not a primary policy an important distinction.  Illinois law, the appellate court explained, does not mandate excess insurance coverage be obtained; nor does it preclude intoxication exclusions in excess insurance policies.  As a result, the appellate court held the intoxication exclusion was not contrary to public policy.  Addressing Crowley’s second point, the appellate court reasoned that adopting her argument would “essentially void any insurance exclusion if that exclusion has the effect of harming an innocent third party.”  The appellate court could not endorse such a result and again held the exclusion was not contrary to public policy.  Therefore, the appellate court reversed the trial court’s ruling and held Empire was not liable for coverage under the excess policy. Crowley v. Empire Fire and Marine Ins. Co., 2019 IL App (2d) 180752 (June 18, 2019).