Targeted Tender Doctrine Settlement of Claim does not Deselect a Targeted Insurer

AMCO Ins. Co. v. Cincinnati Ins. Co. (Ill. App. Ct.; May 5, 2014)

This declaratory judgment action stems from a request for contribution to settlement in an underlying personal injury action commenced against various construction companies. The plaintiff issued both a primary general liability policy and an umbrella policy to one of the contractors, and accepted the targeted tender of another contractor. The plaintiff ultimately paid $1,450,000 on behalf of its policyholder and the other contractor to settle the underlying action and filed a declaratory judgment action against the defendants. The defendant successfully moved to dismiss, arguing that the plaintiff had no valid claims due to the “targeted tender” doctrine which allowed a policyholder covered by multiple insurance policies to target which insurer will defend and indemnify it with regard to a specific claim. The appellate court agreed and held that the targeted tender doctrine did not allow insurers to deselect themselves as targeted insurers following the settlement of the underlying lawsuit. The court also noted that under the plaintiff’s interpretation of the doctrine, a targeted insurer could simply settle the underlying lawsuit contingent on the assignment of the policyholder’s rights, and then seek contribution from every other insurer that was not originally targeted, thereby eviscerating the entire purpose of the targeted tender doctrine.