The Illinois Estoppel Doctrine Revisited: How Promptly Must an Insurer Act?

This article discusses three recent decisions of the Supreme Court of Illinois on the Illinois Estoppel Doctrine, which holds that an insurer that breaches its duty to defend will be estopped from denying coverage in any action by the insured to collect policy proceeds. The article explains how these decisions resolve disputes about the scope of the doctrine but leave open a crucial issue concerning an insurer's ability to protect against estoppel by promptly seeking a declaratory judgment as to its duties. The article observes that Illinois Appellate Court decisions conflict on the standard for testing the timeliness of such a declaratory action. The article evaluates the approaches taken on that question and recommends a resolution. A prior article by the same authors on the estoppel doctrine also appears as an appendix