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executory contracts, and the insured's sole recourse is an action for breach of
contract.
Todd v. German‐American Ins. Co. of New York, 2 Ga. App. 789, 59 S.E. 94
(1907). The court held that a judicial declaration of insolvency of a fire
insurance company cancels all of its existing policies upon which no loss
occurred.
Illinois
Evans v. Illinois Surety Co., 220 Ill. App. 216 (Ill. App. Ct. 1920). The court held
that a claim was improperly disallowed because of the mistaken theory that
the appointment of a receiver had the effect of cancelling the contracts of an
insolvent company because the claims under the contract were not absolute
or liquidated.
In re Liquidation of Inter‐American Ins. Co. of Ill., 329 Ill.App.3d 606, 768 N.E.2d
182 (2002) Insurer’s failure to maintain its portfolio while paying premiums per
reinsurance agreement did not render reinsurance contracts executory such
that reinsurer was still obligated under agreement.
Indiana Lexington Insurance Co. v. American Healthcare Providers, 621 N.E.2d 332
(Ind. Ct. App. 1993). Liability policy that explicitly excludes coverage for
claims involving insolvency or liquidation of insured brought by liquidator of
any insurer is not a violation of public policy. Accordingly, summary
judgment should be entered in favor of liability insurer with respect to
declaratory judgment action filed by insured seeking both defense and
indemnity costs in connection with two lawsuits filed by the Liquidator
against the insured’s officers and directors.
Mutual Security Life Insurance Co. v. Fidelity and Deposit Company of
Maryland, 659 N.E.2d 1096 (Ind. App. 1995). An insurance company in
liquidation sued the insurer which provided coverage to it under a blanket
fidelity bond when the insurer failed to cover claims because of a provision
in the fidelity bond which automatically terminated coverage upon the
taking over of insured by receiver, liquidator or state or federal officials. The
court held that the automatic termination provision did not constitute a
violation of public policy. In so holding, the court rejected the insured’s
argument that the automatic termination provision violated the Liquidator’s
duty to marshal and distribute assets as required by the insolvency
provisions of the Indiana insurance code, reasoning that the Liquidator could
not take possession of an asset that did not exist (due to the termination of
the bond upon insolvency).
Iowa
Schloss v. Metropolitan Surety Co. 128 N.W. 384, 149 Iowa 382 (1910). In an
action to recover on an insurance policy for a loss by burglary, the receiver's
defense was that the insurance had been terminated by insolvency in New
York, the home state of the company, and appointment of a temporary
receiver. The court held that, although an order of liquidation terminates an
insurer's policies and a policyholder is only entitled to recover unearned
premiums, the same is not true during a temporary receivership. Therefore,
the plaintiff was entitled to recover for the loss he incurred during the
temporary receivership.
Louisiana Bobo v. American Fidelity Fire Ins. Co., 550 So.2d 1278 (La. App. 4th Cir. 1989).
Rehabilitator of insolvent New York insurer had authority, pursuant to Uniform
Insurers Liquidation Act, to cancel policies issued to Louisiana insureds, as long
as rehabilitator satisfied requirements of Louisiana law for cancellation of