What is a Service of Suit or Service
of Process clause, and why do I need it?
Ever see Baretta
or Kojak or any of the old cop shows? There was always some
guy jumping out a back window and down a fire escape trying to avoid
being "served" a subpoena or a lawsuit.
That's because for any lawsuit to proceed, the charges in the lawsuit must be
delivered to, or "served" upon, the defendant so that the court
some certainty that the defendant knows that he or she is being sued. The
surplus line law recognizes that in the case of an Illinois insured trying
to sue their surplus line insurer, this could entail great expense or
delay since the insurer could be located anywhere in the world.
The law requires, therefore, that the policy include a provision
whereby the insurer appoints the Director of the Illinois Department of Insurance as an attorney of the company who is authorized to accept this
"service of process" on behalf of the insurer.
For policies effective prior to January 1, 2002, the provision must also
designate the surplus line producer or some other resident in the State
of Illinois as an agent of the insurer to whom the Director may
forward the process for delivery.
The wording in the policy that makes these appointments is called the
"Service of Process" or "Service of Suit" clause or
endorsement and the law requires that all surplus line policies on
Illinois risks include this wording. For sample service of suit wording, click
here. To read the laws and regulations that contain this
requirement, see Section
445 of the Illinois Insurance code, Paragraph 10 and
Insurance Regulation 2701.110.
The materials and information contained herein are only synopses of laws,
regulations and other information and do not constitute legal advice. It is
recommended that you consult your legal advisers regarding application of
state and federal laws and regulations to any particular situation. The
Surplus Line Association does not undertake and hereby disclaims any
obligation to advise you of any change to laws and
regulations or the procedures of the Surplus Line Association.