Settlement Uncovered Where Christmas Lights Promoted in Showroom Displays and Selected Customer Presentations

Santa’s Best Craft, LLC v. Zurich Am. Ins. Co., 941 N.E.2d 291, 304-05 (Ill. App. Ct. (1st Dist., 2d Div.) 2010)

The court’s decision requiring “actual coverage” only comports with earlier precedent if potential coverage of the claim asserted was found not to be a “primary focus” at the time of settlement.  But under Zurich’s adopted ISO policy language, an “advertisement” includes “a notice . . . published to . . . specific market segment about your . . . products . . . .”  Such published policies should have encompassed selected presentations to individual customers where its content was the same and the presentation, like an interactive website, is implicated where the customer meets with the insured.

Assuming that an “advertisement” required advertising and that the latter term implicates only widespread dissemination of material to the public, the Court of Appeals adopted a narrower definition of an “advertisement” than its policy language required.  The Court found it important that “the insured” did not send out any mailer or fliers or conduct any Internet-based advertising to attract potential customers.” 

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