Is There An Actionable Claim Against the Insurer In the Absence of Assignment by the Insured ?
In Yelm v. Country Mutual Insurance Co., 123 Ill. App. 2d 401, 259 N.E.2d 83 (1970), the plaintiff secured a judgment against the insured for the plaintiff's injuries.
The plaintiff sued the insured's insurer and sought damages for the negligent failure to settle her claim. Yelm, 123 Ill. App. 2d at 402, 259 N.E.2d at 83.
The court held that absent an assignment of the claim by the insured to the plaintiff, who was the judgment creditor, the plaintiff had no actionable claim against the insurer. Yelm, 123 Ill. App. 2d at 403-06, 259 N.E.2d at 84-85.
In State Farm Mutual Automobile Insurance Co. v. Murphy, 38 Ill. App. 3d 709, 348 N.E.2d 491 (1976), the insurer, like Western States, sought a declaration it was not liable because the policy limits had been exhausted.
The Murphy insurer also argued one of the injured lacked standing under Yelm.
The Murphy court rejected this argument after finding the act of seeking a declaration, coupled with naming the third party as a defendant, gave the injured the right to challenge the insurer's good faith in the declaratory-judgment action. Murphy, 38 Ill. App. 3d at 711-12, 348 N.E.2d at 493-94.