## Facts

- Gallant Insurance Company insured Christine Narvaez under an automobile liability policy with $20,000 bodily-injury limits.
- Narvaez left her two-year-old grandchild unattended in a parked vehicle with keys in the ignition and the engine running in a supermarket parking lot.
- The child shifted the vehicle into gear; it rolled forward and struck vehicles and pedestrians, including Marguerite A. O’Neill.
- O’Neill suffered catastrophic injuries (including a crushed hip, broken arm, cracked ribs, fractured fingers, and severe internal bleeding), required extended intensive care, and thereafter lived in a nursing home for the remainder of her life.
- O’Neill’s counsel repeatedly offered to settle the personal-injury claim for the $20,000 policy limit.
- Gallant, through its claims decisionmaker, did not accept the policy-limits settlement demand.
- O’Neill obtained a multi-million-dollar judgment against Narvaez that far exceeded the policy limit.
- O’Neill then sued Gallant for bad-faith refusal to settle within policy limits.

## Issues

1. Whether the evidence was sufficient to support a jury finding that the insurer acted in bad faith by refusing to settle within the $20,000 policy limits.
2. Whether, for bad-faith failure to settle, the proper damages measure includes the full excess judgment entered against the insured.
3. Whether alleged evidentiary and jury-instruction errors required reversal or a new trial.

## Decision

- The appellate court affirmed the judgment for O’Neill.
- The court held the evidence supported the jury’s finding that Gallant failed to give the insured’s interests equal consideration and unreasonably rejected a reasonable policy-limits settlement opportunity.
- The court held the proper measure of damages for bad-faith refusal to settle included the full amount of the underlying judgment, including the portion exceeding policy limits.
- The court rejected the insurer’s claims of prejudicial trial error.

## Legal Principles

- When an insurer controls settlement, it must give the insured’s interests equal consideration with its own in evaluating settlement offers.
- An insurer may be liable for the entire judgment against its insured, including amounts above policy limits, if its negligent or bad-faith refusal to settle exposes the insured to an excess judgment.
- Bad faith may be inferred where liability is clear, damages exposure is substantial, and the insurer rejects a reasonable settlement demand within policy limits.
- In Illinois, damages for bad-faith failure to settle may be the full excess judgment entered against the insured in the underlying action.

## Conclusion

The court upheld a verdict imposing on the insurer the full excess judgment where the insurer declined repeated policy-limits settlement offers despite clear liability and catastrophic damages, breaching its duty to treat the insured’s settlement interests on equal terms with its own.


O’Neill v. Gallant Ins. Co., 329 Ill. App. 3d 859, 769 N.E.2d 100 (Ill. App. Ct. 5th Dist. 2002)