LEXIS at *3-*4. Similarly, Section 154 prevents Defendants from using the August 8 fax as a bar to coverage because the August 8 fax, made in connection with the August 3 application, was not attached to the policy.
The August 8 fax containing prior loss information comes within the negotiation for a policy of insurance because the prior loss information was necessary for the purpose of evaluating whether to issue the policy. See International Amphitheatre, 532 N.E.2d at 499 (information regarding additional insureds required before coverage could be extended, and therefore, came within the negotiation of the policy); Government Employees Insurance Co. v. Dennis, 65 Ill. App. 2d 365, 371, 212 N.E.2d 759, 761-762 (2nd Dist. 1965).
Mecha testified that establishing no prior losses was "an absolute prerequisite for all policies issued by [Defendants]." (Mecha Dep. P 29). According to Mecha's testimony, if the August 8 fax indicated prior losses, Defendants would not have issued a policy. Id.
Defendants argue that the August 8 fax should not be granted Section 154 protection because the subject policy became effective and was a legally binding insurance contract with coverage as of August 3, 1994. Zannini v. Reliance Insurance, 147 Ill. 2d 437, 590 N.E.2d 457, 464, 168 Ill. Dec. 820 (1992) (binder is a written instrument providing temporary insurance from the time an application is made until a policy is issued or declined.). According to Defendants, "once the binder and insurance contract are in place and effective, the parties are no longer "negotiating" for insurance. The parties are then working within the framework of the insurance contract itself." (Defendants' March 21, 1997 Memorandum p. 2).
Although temporary insurance may have been in place as of August 3, 1994, the parties were still in the negotiation stage for insurance as of August 8,1994. Defendants requested Plaintiff to submit the prior loss information contained in the August 8 fax. Again, Mecha testified that, in connection with the application, establishing no prior losses was "an absolute prerequisite" for all insurance policies issued by Defendants. ("Mecha Dep. PP 28-29). Accordingly, the August 8 fax occurred during the negotiation for insurance because Defendants requested and used this information to determine whether to issue Plaintiff's policy or decline the risk. See International Amphitheatre, 532 N.E.2d at 499.
Defendants cite Carroll v. Preferred Risk Insurance Co., 60 Ill. App. 2d 170, 176-177, 208 N.E.2d 836, aff'd 34 Ill. 2d 310, 215 N.E.2d 801 (1965), for the proposition that the purpose of Section 154 is to preclude an insurer from charging misrepresentation of facts which occurred up to and at the time an application for insurance is executed. (Defendants' Response p. 2). Carroll, however, is distinguishable from the instant case. Carroll involved a traffic accident that occurred after an application was submitted but before the policy was issued. The court held that insurer "was within its rights" in refusing coverage because insured should have informed insurer of the intervening traffic accident. Carroll, 60 Ill. App. 2d at 176-77, 208 N.E.2d at 839. However, the court found that Section 154 did not bear on the case before it. Section 154 does not apply to an intervening event that "come[s] to the knowledge of insured after an application is made but before a policy is issued." Id.
Unlike Carroll, here there is no intervening event which required Plaintiff to contact Defendants. The August 8 fax occurred during the negotiation for an insurance policy. Therefore, Defendants were required to meet all of the requirements of Section 154 in order to deny Plaintiff's claim on the basis of misrepresentations contained in the August 8 fax. Section 154 required Defendants to physically attach the August 8 fax to the application for insurance. Because Defendants failed to meet the statutory requirements of Section 154, Plaintiff's motion in limine is granted with respect to the claims for breach of contract and tortious interference with contract which will be tried to the jury. The Court denies, as premature, the motion in limine with respect to the bad faith claim. In the event Plaintiff prevails at the jury trial, it is free to request the Court to further consider this issue prior to the hearing on its bad faith claim. In the event Defendants prevail before the jury, this issue becomes moot.
For the foregoing reasons, Plaintiff's Revised First Motion In Limine is GRANTED with respect to the claim for breach of contract and tortious interference with contract, and denied as premature with respect to the bad faith claim.
SO ORDERED THIS 21ST DAY OF APRIL, 1997.
United States Magistrate Judge