American Alliance Casuality Co. v. Aguirre

• Court: Appellate Court of Illinois
• Decided: May 29, 2026
• Docket: 1-24-2194
• Status: Published

Opinion

2026 IL App (1st) 242194

FIRST DISTRICT, SIXTH DIVISION May 29, 2026

No. 1-24-2194

AMERICAN ALLIANCE CASUALTY ) Appeal from the COMPANY, ) Circuit Court of ) Cook County. Plaintiff-Appellee, ) ) v. ) ) No. 2022 CH 07295 JOSE AGUIRRE, HECTOR ENRIQUE ) QUINONEZ, ADELINA HERNANDEZ, LUIS ) MERCADO, CHAKERIA HARRIS, THE CITY ) OF CHICAGO, AND STATE FARM MUTUAL ) AUTOMOBILE INSURANCE COMPANY, ) Honorable ) Sophia Hall, Defendants ) Judge Presiding. ) (Luis Mercado, ) ) Defendant-Appellant). )

JUSTICE GAMRATH delivered the judgment of the court, with opinion. Justice Hyman concurred in the judgment and opinion. Justice Pucinski specially concurred, with opinion.

OPINION

¶1 This insurance coverage dispute stems from a 2019 collision in which Defendant-

Appellant, Luis Mercado, was a passenger in an automobile owned and operated by Defendant

Jose Aguirre. Aguirre’s vehicle was insured by Plaintiff-Appellee, American Alliance, whose

policy requires notice within 30 days of an accident, regardless of fault. Aguirre waited over two

years to give notice to American Alliance, prompting American Alliance to file a declaratory No. 1-24-2194

action, asking the court to find it did not owe coverage because of the late notice. American

Alliance moved for summary judgment, which the circuit court granted. Mercado appeals, arguing

a question of fact exists as to whether Aguirre’s failure to notify American Alliance of the accident

within 30 days constitutes a material breach of contract. For the following reasons, we affirm the

circuit court’s decision. 1

¶2 I. BACKGROUND

¶3 On October 11, 2019, Mercado was a passenger in a vehicle owned and operated by

Aguirre. Aguirre’s vehicle was insured with the minimum liability coverage of $25,000, as

required by Illinois law, pursuant to a policy of insurance issued by American Alliance. While

entering an intersection, Aguirre’s vehicle was struck on the side by a vehicle owned and operated

by Defendant Hector Quinones, who was also insured for $25,000, under a policy issued by State

Farm. As a result of this collision, Mercado sustained injuries that required extended

hospitalization and resulted in substantial medical expenses.

¶4 Three days after the accident, Aguirre contacted his insurance broker, Cresco Insurance

Agency, to inform his agent of his involvement in a “bad accident” and to request that automatic

premium payments for the relevant policy be discontinued because his car was totaled. Aguirre

testified he believed he was notifying his insurer, American Alliance, by contacting Cresco. Cresco

should have told Aguirre to notify American Alliance of the accident but did not. However,

Aguirre had been in a previous motor vehicle accident where he was told to contact American

Alliance, which he did, along with completing an accident form for American Alliance. Aguirre

admitted receiving cancellation and reinstatement notices directly from American Alliance, and

1 This appeal was fully briefed as of August 26, 2025. After a panel reassignment in April 2026, oral argument took place on May 14, 2026, and the decision followed promptly.

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his insurance card and policy list American Alliance, not Cresco, as his insurer.

¶5 Cresco’s owner, Paula Jiminez, testified that Cresco offers insurance policies from multiple

insurance companies and customers pay directly to their chosen insurer. Even when Cresco accepts

payments, payments are given directly to the insurer. After binding coverage, Cresco provides

customers with a copy of the policy declaration page and insurance cards. While the declaration

page instructs insureds to contact Cresco with any questions regarding the declaration, insurers

understand they are insured by their chosen insurance company, not Cresco. Aguirre’s declaration

page says, “Welcome to American Alliance Casualty Company!”

¶6 The notice provision of Aguirre’s insurance policy states:

“CONDITIONS

3. A. Notice of. As a condition precedent to coverage under every Part of this

policy, within 30 days of any accident, occurrence or loss, regardless of fault, the

Company must receive written notice containing at least the following

information: a) The time, place and location of the loss; and b) The full name and

address of each known person who occupied any vehicle involved in the loss

and/or who was present at the scene at the time of the loss; and c) The purpose of

the use of the vehicle at the time of the loss; and d) The facts surrounding the

loss; and e) Any other information the Company requests in order to concluded

its investigation of the loss.

***

C. Written Notice to the Company Defined. All written notices from the

insured(s) required by this policy shall be made by certified mail, return receipt

requested, or by personal hand delivery with signed receipt. All written notices

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must be received by the Company in order to be valid. A receipt which has been

signed for by the company shall create a rebuttable presumption that such notice

was received by the company, and the date of receipt or the date mailed as

evidenced by the envelope, whichever is earlier, shall be the date of the notice.

All notices shall be delivered and/or addressed to the company at:

American Alliance Casualty Company

8725 W Higgins Rd, Suite 725

Chicago, Illinois 60631.” (emphasis in original)

¶7 On October 7, 2021, almost two years after the collision, Mercado sued Aguirre and

Quinones, alleging negligence in the operation of their respective vehicles. On November 1, 2021,

Aguirre notified American Alliance of the lawsuit by telephone. American Alliance then filed a

declaratory judgment action, seeking a finding of no coverage due to Aguirre’s failure to notify it

of the accident within the 30-day notice requirement as set forth in the policy. In response, Mercado

argued that Aguirre’s late notice to his insurer, considering all the facts and circumstances

surrounding the case, including the lack of prejudice to American Alliance, did not constitute a

material breach sufficient to warrant a finding of no coverage. The circuit court disagreed and

granted summary judgment for American Alliance. The court reasoned there was no need to

dispense with the policy’s condition precedent requiring timely notice. Therefore, whether

American Alliance was prejudiced was irrelevant. Mercado appeals.

¶8 II. STANDARD OF REVIEW

¶9 Where, as here, an appeal arises from the court’s granting of summary judgment, the

standard of review is de novo. Lewis v. Lead Industries Ass’n, 2020 IL 124107, ¶ 15. Likewise,

“where this court must construe the terms of a contract or an insurance policy, as we must do in

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this case, the court is presented with a *** question of law, and our review is de novo.” West Bend

Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978, ¶ 30 (citing Schultz v.

Illinois Farmers Insurance Co., 237 Ill. 2d 391, 399 (2010)).

¶ 10 III. ANALYSIS

¶ 11 Mercado concedes Aguirre’s notice to American Alliance was untimely but argues the

circuit court erred in granting summary judgment because there is a question of fact as to whether

the late notice was so unreasonable that it constitutes a material breach. Mercado contends that

without a material breach, American Alliance owes coverage for the crash. See Direct Auto

Insurance Co. v. O’Neal, 2022 IL App (1st) 211568, ¶ 15 (“ ‘[o]nly a material breach of a contract

provision will justify nonperformance by the other party’ ” (quoting InsureOne Independent

Insurance Agency, LLC v. Hallberg, 2012 IL App (1st) 092385, ¶ 33, citing Israel v. National

Canada Corp., 276 Ill. App. 3d 454, 461 (1995))).

¶ 12 American Alliance counters, arguing that the 30-day notice provision in Aguirre’s policy

is an unambiguous condition precedent to coverage that the court correctly enforced. See Founders

Insurance Co. v. Munoz, 237 Ill. 2d 424, 433 (2010) (if the language of an insurance policy is

unambiguous, the court will apply a provision as written unless it contravenes public policy).

¶ 13 A. Reasonable Notice

¶ 14 Most Illinois cases involving notice provisions of a personal automobile policy involve a

provision that requires notice to be “immediate,” “prompt,” or “as soon as practicable.” In these

circumstances, the notice provision is interpreted to mean “within a reasonable time,” which

depends on the facts and circumstances of each case. See, e.g., Country Mutual Insurance Co. v.

Livorsi Marine, Inc., 222 Ill. 2d 303, 311-12 (2006) (as soon as practicable); Barrington

Consolidated High School v. American Insurance Co., 58 Ill. 2d 278, 282 (1974) (as soon as

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practicable); Stonegate Insurance Co. v. All City Towing, Inc., 2024 IL App (1st) 221769, ¶ 58

(prompt); Farmers Automobile Insurance Ass’n v. Burton, 2012 IL App (4th) 110289, ¶ 16

(prompt); Illinois Insurance Guaranty Fund v. Lockhart, 152 Ill. App. 3d 603, 608 (1987)

(immediate).

¶ 15 Factors to consider in determining reasonable notice include (1) the specific language of

the policy’s notice provision; (2) the degree of the insured’s sophistication in the world of

commerce and insurance; (3) the insured’s awareness of an event that may trigger insurance

coverage under the terms of the policy; (4) the insured’s diligence in ascertaining whether policy

coverage is available; and (5) prejudice to the insurance company. Livorsi, 222 Ill. 2d at 313. The

failure to provide reasonable notice will defeat the insured’s right of coverage, even if the insurer

is not prejudiced. Id. at 316-17; Simmon v. Iowa Mutual Casualty Co., 3 Ill. 2d 318, 322-23 (1954)

(lack of prejudice may be a factor but does not dispense with the reasonable notice requirement);

Stonegate Insurance Co., 2024 IL App (1st) 221769, ¶ 57 (same). However, when late notice is

reasonable and credibly explained, the insurer may nevertheless be required to provide coverage

unless it shows resulting prejudice. O’Neal, 2022 IL App (1st) 211568, ¶¶ 9, 25.

¶ 16 The issue here is whether the policy’s 30-day notice provision implies that notice must be

provided within a reasonable time and whether the Livorsi factors apply. Consistent with O’Neal,

we hold that they do. Although O’Neal does not address the Livorsi factors in detail, it is apparent

that the court relied on them in finding that the breach of a 30-day notice provision was not

material. Instead, the court found the late notice was reasonable given the insured’s credible

explanation for the delay. Id. ¶¶ 5, 9. We adopt this same liberal approach to prevent the automatic,

unfair denial of personal automobile coverage to insureds who provide late, but reasonable notice.

¶ 17 Notice provisions are often listed as conditions precedent to coverage and serve a valid

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purpose. They enable insurers to make a timely investigation of the facts relating to liability and

the extent of coverage and protect against fraudulent or invalid claims. Barrington Consolidated

High School, 58 Ill. 2d at 281; INA Insurance Co. v. City of Chicago, 62 Ill. App. 3d 80, 83 (1978).

However, insurance policies are not privately negotiated contracts in the traditional sense. In the

context of the average insured, insurance policies are adhesion-type contracts in which insurers

dictate conditions precedent to consumers. Thus, even a specific 30-day notice provision in a

personal automobile policy carries an inherent reasonableness standard. While the 30-day notice

provision remains pertinent in evaluating reasonable notice under the Livorsi factors, strict

enforcement, as American Alliance contends, would substantially diminish the practical value of

the policy by indiscriminately denying coverage to insureds who provide late yet reasonable

notice.

¶ 18 B. Livorsi Factors

¶ 19 We turn now to the Livorsi factors in considering whether Aguirre provided reasonable

¶ 20 The question of reasonable notice is generally a question of fact, but where the facts are

uncontroverted, it is a question for the court to decide. Olivieri v. Coronet Insurance Co., 173 Ill.

App. 3d 867, 871 (1987). Here, based on the undisputed facts, we find Aguirre’s late notice to

American Alliance was unreasonable as a matter of law, precluding coverage.

¶ 21 The first Livorsi factor requires us to analyze the policy’s specific notice provision. The

language is clear: it requires written notice within 30 days of any accident, occurrence, or loss,

regardless of fault. It is undisputed that Aguirre waited more than two years to notify American

Alliance of the accident. Although Aguirre informed Crespo of the accident, Crespo was Aguirre’s

broker, not an agent of American Alliance. Therefore, notice to Crespo did not constitute notice to

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American Alliance. While Crespo should have directed Aguirre to contact American Alliance, that

omission does not alter the analysis. This factor weighs heavily in favor of American Alliance.

¶ 22 Under the second factor, the insured’s sophistication, Aguirre was previously involved in

a motor vehicle accident and, at that time, was told by Cresco to contact American Alliance

directly. Aguirre did so and completed forms requested by American Alliance. Aguirre knew what

was required of him in the event of an accident, based on his previous experience. He also knew to

call Crespo to stop his automatic payments to American Alliance after the latest accident, and knew

to call American Alliance two years later, after Mercado sued. Aguirre also received a series of

cancellation and reinstatement notices, bearing the name “American Alliance Casualty Company”

across the top and containing the physical address, website address, and telephone number of

American Alliance. While Mercado argues that Aguirre believed Crespo was his insurance

company, “an insured’s subjective beliefs must give way to an objective standard of

reasonableness based on all the circumstances.” Kerr v. Illinois Central R.R. Co., 283 Ill. App. 3d

574, 586 (1996). This factor weighs in favor of American Alliance.

¶ 23 As to the third factor, awareness of an event that may trigger coverage, reasonable insureds

would recognize that an accident in which their car was totaled and their passenger hospitalized

might trigger coverage. Aguirre especially was acutely aware, as evidenced by his prior accident,

his phone call to Cresco asking to stop his insurance payments, and the plain language of the policy

requiring notice of any accident, regardless of fault. This factor weighs strongly in favor of

American Alliance.

¶ 24 As to the fourth factor, diligence, the record contains nothing that shows Aguirre took

prompt action to find out whether policy coverage existed. After the crash, he could have contacted

American Alliance, checked his insurance card, read the insurance policy or declaration page, or

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asked Crespo for information. He did not take any of these steps until two years later, when he was

sued. This factor also favors American Alliance.

¶ 25 As to the fifth factor, prejudice to the insurer, lack of prejudice to American Alliance may

be a factor in determining the question of reasonable notice, but it does not dispense with the

requirement of reasonable notice. Livorsi, 222 Ill. 2d at 316. For decades, courts have held that in

the absence of reasonable notice, a showing of prejudice is not required. See id.; Simmon, 3 Ill. 2d

at 321; Stonegate Insurance. Co., 2024 IL App (1st) 221769, ¶ 57; AMCO Insurance Co. v. Erie

Insurance Exchange, 2016 IL App (1st) 142660, ¶ 29; Kerr, 283 Ill. App. 3d at 585. Here, a

showing of prejudice is not required because Aguirre’s notice was patently unreasonable,

particularly considering his two-year delay when compared to the 30-day notice requirement and

other Livorsi factors.

¶ 26 IV. CONCLUSION

¶ 27 We hold that when a notice provision in a personal automobile policy specifies a set time,

such as 30 days, a standard of reasonableness is embedded into that provision, and the Livorsi

factors apply. Further, once it is determined that the insurer did not receive reasonable notice, the

policyholder may not recover under the policy, regardless of whether the lack of reasonable notice

prejudiced the insurer. See Livorsi, 222 Ill. 2d at 317.

¶ 28 Because Aguirre’s notice was unreasonable as a matter of law, the policy affords no

coverage, regardless of any lack of prejudice to American Alliance. Therefore, we affirm the

judgment of the circuit court.

¶ 29 Affirmed.

¶ 30 JUSTICE PUCINSKI, specially concurring:

¶ 31 I concur because the caselaw leaves me little choice.

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¶ 32 I write this special concurrence in regard to the majority’s wishful thinking statement:

“While Crespo should have directed Aguirre to contact American Alliance, that omission does not

alter the analysis. This factor weighs heavily in favor of American Alliance.”

¶ 33 I consider this a wishful thinking statement because I hope it brings to mind in the

legislature and in the Illinois Department of Insurance the role of an insurance agent as the agent

of the policy buyer. In the competitive industry of auto insurance in Illinois, requiring drivers to

buy insurance is a powerful tool that should be accompanied by also requiring policy sellers to

provide meaningful assistance, including meaningful directions and information to their clients.

¶ 34 Crespo took Mercado’s money but did not go to the next step: telling him to call American

Alliance. Crespo told him once before, so the undisputed fact that it did not tell him this time could

have meant to him that he did not need to call American this time, misunderstanding that Crespo

would do it for him.

¶ 35 A shell game is a shell game. Our law and rules makers could level the playing field by

adding sensible requirements for insurance agents.

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American Alliance Casualty Co. v. Mercado, 2026 IL App (1st) 242194

Decision Under Review: Appeal from the Circuit Court of Cook County, No. 2022-CH- 07295; the Hon. Sophia Hall, Judge, presiding.

Attorneys Tracy A. Robb and John R. Gorey, of Curcio Law Offices, of for Chicago, for appellant. Appellant:

Attorneys Donald Patrick Eckler and Joshua W. Zhao, of Freeman Mathis for & Gary, LLP, of Chicago, for appellee. Appellee:

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