The short answer
Section 155 of the Illinois Insurance Code lets a court award attorney fees, costs, and an additional amount when an insurer’s refusal to pay, or its delay in settling a claim, is “vexatious and unreasonable.” Separately, a liability insurer that unreasonably refuses to settle within policy limits can be responsible for a judgment above those limits.
Why it matters
Without Section 155, the cost of suing your own insurer can consume much of what you recover. The possibility of a fee award changes how an insurer weighs a stubborn denial or a slow-walked claim.
Where it fits in your case
Usually in a lawsuit against your own insurer after a delayed or denied claim. Failure-to-settle issues arise when a lawsuit against you could exceed your coverage and the insurer turns down a reasonable settlement within limits.
What to expect
A high bar. A wrong denial is not automatically vexatious. A genuine, reasonable dispute about coverage generally is not, even if the insurer loses. Courts look at the insurer’s conduct as a whole.
What can be recovered. Reasonable attorney fees and costs, plus an additional amount capped at the greatest of 60% of what you are owed, $60,000, or the difference between what you recover and what the insurer offered before the lawsuit.
The main remedy. In Illinois, Section 155 is generally the remedy for an insurer’s unreasonable delay or denial, rather than a separate bad faith lawsuit for punitive damages.
Excess judgments. When an insurer controls the defense and unreasonably rejects a settlement within limits, it may have to pay a resulting judgment above the limits.
What to do now
Keep a dated record of every request, response, and delay.
Answer the insurer’s reasonable requests promptly so delay cannot be blamed on you.
Ask for any denial, and the reasons for it, in writing.
If a settlement within your limits is offered in a lawsuit against you, ask the insurer in writing to accept it.
What we need from you
The policy, the claim correspondence, any denial letters, settlement offers, and a timeline of the claim.
Common misconceptions
“Any wrong denial is bad faith.” Not under Illinois law. The conduct must be unreasonable.
“We can get punitive damages for bad faith.” Usually not. Section 155 is the main remedy.