Appeal from the Circuit Court of Cook County. Honorable Thomas P. Quinn Judge Presiding.
Released for Publication July 14, 1994.
The opinion of the court was delivered by: Cahill
PRESIDING JUSTICE CAHILL delivered the opinion of the court:
We address two questions in this appeal: whether a premium finance company was required under Illinois law in 1983 to notify an additional insured when it requested cancellation of an insurance policy, and whether a private right of action exists under that part of the Insurance Code which governs the conduct of premium finance companies. We answer yes to both questions and affirm the trial court.
In 1983, the Insurance Code required a premium finance company to notify "the insured" when it requested that a policy be cancelled. (Ill. Rev. Stat. 1983, ch. 73, par. 1065.68.) Today, the statute requires the premium finance company to notify "the named insured." 215 ILCS 5/513a11 (West 1992).
Howard Haft owned a building in Chicago. Ted Theodorarakis rented this property and operated a restaurant there. Theodorarakis' lease required him to maintain fire insurance for $50,000. Theodorarakis bought an insurance policy for $50,000 from Travelers Insurance through Charter Oak Fire Insurance Company for the period of June 29, 1984, to June 29, 1985. The policy listed Theodorarakis as a named insured. Haft was listed on the policy as an additional insured.
On September 24, 1984, Theodorarakis signed a premium finance agreement with Unigard Service Corporation. Under the agreement, Unigard, a premium finance company, paid the full premium of the insurance policy to Travelers and Theodorarakis agreed to make monthly payments to Unigard. The agreement also contained a power of attorney which authorized Unigard to act on behalf of Theodorarakis in matters relating to the policy.
In December 1984 the bank returned Theodorarakis' checks payable to Unigard for insufficient funds. Unigard sent a notice of its intent to cancel the insurance policy to Theodorarakis if he did not pay the overdue installment within ten days. Unigard did not send notice to Haft of its intent to cancel.
Theodorarakis failed to pay within ten days. Unigard then exercised the power of attorney and requested cancellation of the insurance policy on behalf of Theodorarakis. Unigard sent the request for cancellation to Travelers with a copy to Theodorarakis. It did not send a copy of the request to Haft. Based upon Unigard's request, Travelers cancelled the insurance policy on December 24, 1984. Travelers also returned the unearned premium to Unigard.
On June 12, 1985, a fire partially destroyed the property. Haft notified Travelers of the loss, but Travelers refused to pay him because it had cancelled the policy. Haft then filed a lawsuit against Theodorarakis, Unigard, and Travelers. Travelers settled with Haft for $23,500. Theodorarakis settled with Haft for $5,000. Haft pursued his claim against Unigard. He based his claim on the ground that Unigard violated section 521 of the Insurance Code (Ill. Rev. Stat. 1983, ch. 73, par. 1065.68) when it did not notify him of its intent to cancel and request to cancel the insurance policy.
Section 521 of the Insurance Code in 1983 stated:
"Cancellation of Insurance Contract Upon Default. When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is effectuated in accordance with this Section.
(1) Not less than 10 days written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the ...