                                     2018 IL 122556



                                        IN THE

                               SUPREME COURT

                                           OF

                         THE STATE OF ILLINOIS





                                   (Docket No. 122556)

             AMERICAN FAMILY MUTUAL INSURANCE COMPANY v.
              WALTER KROP et al., Appellees (Andy Varga, Appellant).



                              Opinion filed October 18, 2018.



        JUSTICE GARMAN delivered the judgment of the court, with opinion.

         Chief Justice Karmeier and Justices Thomas, Burke, and Neville concurred in
     the judgment and opinion.

        Justice Theis dissented, with opinion, joined by Justice Kilbride.



                                        OPINION

¶1       When customers allege that their insurance company negligently sold them a
     deficient insurance policy, section 13-214.4 of the Code of Civil Procedure (Code)
     gives those customers a two-year deadline to file any lawsuits. 735 ILCS
     5/13-214.4 (West 2014). In this case we are asked to determine when the cause of
     action accrues in such cases. American Family Mutual Insurance Company
     (American Family) filed a declaratory judgment action against Walter and Lisa
     Krop, contending their homeowner’s insurance policy did not cover a tort action
     pending against their son. The Krops filed a counterclaim against American Family
     and a third-party claim against Andrew Varga, an insurance agent for American
     Family. Varga argued at the circuit court that the cause of action for negligently
     selling a deficient policy accrues as soon as customers purchase their policy. The
     Krops claimed that the cause of action does not accrue until the insurer refuses to
     provide coverage. Agreeing with Varga, the circuit court dismissed the Krops’
     claims against Varga and American Family as untimely. The appellate court
     reversed. 2017 IL App (1st) 161071. Varga petitioned for leave to appeal, and we
     allowed the petition. Ill. S. Ct. R. 315(a) (eff. Mar. 15, 2016).

¶2       We hold that when customers have the opportunity to read their insurance
     policy and can reasonably be expected to understand its terms, the cause of action
     for negligent failure to procure insurance accrues as soon as the customers receive
     the policy. Here the Krops filed their complaint over two years after they received
     their American Family policy, and they did not plead facts that would support any
     recognized exception to the expectation that customers will read the policy and
     understand its terms, so their claim was untimely. We reverse the appellate court’s
     decision.


¶3                                    BACKGROUND

¶4       In early 2012 Walter and Lisa Krop asked Andrew Varga to provide them with
     a new homeowner’s insurance policy from American Family. Although the details
     of their interactions with Varga are contested, the Krops claim that they gave him a
     copy of their old policy with Travelers insurance company and requested a new
     policy that was “equal to the coverages provided by Travelers.” They further allege
     that Varga promised to provide them with an American Family policy that was
     equal to or better than the Travelers policy for a similar price. American Family and
     the Krops agreed to a policy, which American Family issued on March 21, 2012.
     The Krops renewed this policy each of the next three years.




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¶5       In mid-2014, Mary Andreolas sued the Krops, seeking damages for defamation,
     invasion of privacy, and intentional infliction of emotional distress. The specifics
     of the lawsuit are not relevant to this decision, except that on August 20, 2014,
     American Family denied the Krops coverage for Andreolas’s suit.

¶6       Soon thereafter American Family filed a declaratory judgment action in the
     circuit court of Cook County to justify its denial of coverage. The complaint cited
     portions of the Krops’ policy that American Family argued excluded the alleged
     torts from coverage. In a section of the policy titled “LIABILITY
     COVERAGES—SECTION II,” American Family had promised:

        “We will pay, up to our limit, compensatory damages for which any insured is
        legally liable because of bodily injury or property damage caused by an
        occurrence covered by this policy.”

     The policy’s definition of “bodily injury” excluded “emotional or mental distress,
     mental anguish, mental injury, or any similar injury unless it arises out of actual
     bodily harm to the person.” Finally, the policy defined “occurrence” as “an
     accident, including exposure to conditions, which results during the policy period
     in: a. bodily injury; or b. property damage.”

¶7       American Family claimed that this policy did not cover liability for the alleged
     defamation, invasion of privacy, or intentional infliction of emotional distress
     because Andreolas did not seek damages for any bodily injury. Additionally,
     American Family argued that, because the policy only covered “damage caused by
     an occurrence” and an “occurrence” requires an “accident,” the policy did not cover
     the Krops’ liability for the intentional conduct that Andreolas alleged.

¶8       On September 3, 2015, the Krops responded with a counterclaim against
     American Family and a third-party complaint against Varga. They alleged that
     Varga negligently failed to provide them with an insurance policy equal to their
     Travelers policy, as they had requested, and that American Family was vicariously
     liable for its agent’s negligence. The Travelers policy had covered liability for
     “personal injury” as well as bodily and property injuries. Although both policies
     extended coverage to injuries caused by “occurrences,” the Travelers policy
     defined “occurrence” to include an “offense *** that results in ‘personal injury.’ ”
     The American Family policy did not include offenses causing personal injury in its




                                            -3­
       definition of “occurrence.” According to the Krops, Varga failed to exercise
       ordinary care, and this failure caused the Krops to lack coverage for personal
       liability in Andreolas’s lawsuit.

¶9         Varga and American Family both moved to dismiss the Krops’ claims under
       sections 2-615 and 2-619 of the Code. 735 ILCS 5/2-615, 2-619 (West 2014).
       Section 13-214.4 of the Code creates a two-year statute of limitations for claims
       against insurance producers. Id. § 13-214.4. Varga and American Family argued
       that this two-year period began when the Krops first received their policy in March
       2012, so their claims were untimely after March 2014.

¶ 10       The circuit court dismissed the Krops’ counterclaims under section 2-619 of the
       Code. Relying on Hoover v. Country Mutual Insurance Co., 2012 IL App (1st)
       110939, the court found that the two-year limitations period for claims against
       insurance producers begins as soon as the insurer issues the policy. It rejected the
       Krops’ argument that they could not have known about the defect in their policy,
       reasoning instead that insurance customers have an obligation to read their policies
       and understand the terms. Because American Family issued the Krops’ policy on
       March 21, 2012, the court concluded that all claims after March 21, 2014, were
       untimely. The Krops filed their counterclaims and third-party complaint on
       September 22, 2015, so the circuit court granted Varga’s and American Family’s
       motions to dismiss.

¶ 11       The appellate court reversed the dismissal. 2017 IL App (1st) 161071. It stated
       that other Illinois cases have distinguished between lawsuits alleging negligence by
       an insurer, like American Family, and those alleging negligence by an agent, like
       Varga. Id. ¶ 34 (citing Perelman v. Fisher, 298 Ill. App. 3d 1007 (1998)). Based on
       those decisions, the appellate court found that insurance agents owe their customers
       a fiduciary duty and that this duty is more significant than the customers’ obligation
       to read their policy. The court concluded that the limitations period did not begin to
       run when the policy was issued in March 2012. Instead, the “discovery rule”
       delayed the start of the limitations period until the Krops knew or should have
       known of the injury. Finally, the court found that the Krops reasonably should have
       known of the injury only when American Family denied them coverage in August
       2014 and that the Krops’ claims in September 2015 were timely. Id. ¶ 36. Varga
       petitioned this court for leave to appeal, but American Family did not. We allowed




                                               -4­
       Varga’s petition. Ill. S. Ct. R. 315(a) (eff. Mar. 15, 2016).


¶ 12                                        ANALYSIS

¶ 13       The circuit court granted Varga’s section 2-619 motion, and we review a
       dismissal under section 2-619 de novo. Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d
       351, 361 (2009). A section 2-619 motion admits the legal sufficiency of the
       complaint but asserts another affirmative matter that defeats the claim. King v. First
       Capital Financial Services Corp., 215 Ill. 2d 1, 12 (2005). Section 2-619(a)(5)
       authorizes a court to dismiss a complaint that was filed outside of the relevant
       limitations period. 735 ILCS 5/2-619(a)(5) (West 2014). When reviewing a
       dismissal under section 2-619, this court will affirm only if there is no genuine issue
       of material fact and the movant is entitled to judgment as a matter of law. Kedzie &
       103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-17 (1993). It also
       admits as true all well-pleaded facts and all reasonable inferences that can be drawn
       from them. Porter v. Decatur Memorial Hospital, 227 Ill. 2d 343, 352 (2008). We
       construe those facts in the light most favorable to the nonmoving party. Id.


¶ 14          A. Earliest Accrual Date for Negligent Failure to Procure Insurance

¶ 15       The Krops’ suit is premised on Varga’s alleged failure to satisfy his statutory
       obligation in procuring an American Family insurance contract for the Krops.
       Section 2-2201(a) of the Code states that “[a]n insurance producer, registered firm,
       and limited insurance representative shall exercise ordinary care and skill in
       renewing, procuring, binding, or placing the coverage requested by the insured or
       proposed insured.” 735 ILCS 5/2-2201(a) (West 2014). The section does not define
       “insurance producer,” but we have held that this term includes “captive agents” like
       Varga, who represent a particular insurance company and sell that company’s
       policies to customers. Skaperdas v. Country Casualty Insurance Co., 2015 IL
       117021, ¶¶ 19, 23. The Krops alleged that Varga breached the insurance producer’s
       duty of ordinary care.

¶ 16      Section 13-214.4 of the Code is the statute of limitations for such claims. It
       provides that:




                                                -5­
          “All causes of action brought by any person or entity under any statute or any
          legal or equitable theory against an insurance producer, registered firm, or
          limited insurance representative concerning the sale, placement, procurement,
          renewal, cancellation of, or failure to procure any policy of insurance shall be
          brought within 2 years of the date the cause of action accrues.” 735 ILCS
          5/13-214.4 (West 2014).

¶ 17       Although this statute clearly bars a claim under section 2-2201(a) filed more
       than two years after the cause of action accrues, it does not define what constitutes
       accrual. To fill this gap, this court has explained that, for tort claims,

          “the cause of action usually accrues when the plaintiff suffers injury.
          [Citations.] For contract actions and torts arising out of contractual
          relationships, though, the cause of action ordinarily accrues at the time of the
          breach of contract, not when a party sustains damages. [Citations.] The reason
          for this distinction is the concern that plaintiffs will delay bringing suit after a
          contract is breached in order to increase damages.” Hermitage Corp. v.
          Contractors Adjustment Co., 166 Ill. 2d 72, 77 (1995).

¶ 18       Illinois courts have typically treated allegations of negligence in relation to
       insurance policies, such as the negligent procurement claim here, as torts arising
       out of contractual relationships. See, e.g., Hoover, 2012 IL App (1st) 110939, ¶ 52;
       State Farm Fire & Casualty Co. v. John J. Rickhoff Sheet Metal Co., 394 Ill. App.
       3d 548, 565 (2009); Indiana Insurance Co. v. Machon & Machon, Inc., 324 Ill.
       App. 3d 300, 303-04 (2001). In Kanter v. Deitelbaum, 271 Ill. App. 3d 750, 755
       (1995), the appellate court characterized this cause of action as “extracontractual.”
       Unlike other torts, the earliest date of accrual for torts arising out of contractual
       relationships is the date of the breach of the duty or the contract, not the date of the
       damages. Indiana Insurance Co., 324 Ill. App. 3d at 304; Hoover, 2012 IL App
       (1st) 110939, ¶ 52; see also Hermitage Corp., 166 Ill. 2d at 77.

¶ 19       Here the date of the alleged breach was March 21, 2012. On this day Varga
       procured for the Krops an insurance policy that did not cover defamation, invasion
       of privacy, and intentional infliction of emotional distress, which the Krops alleged
       they had asked Varga to provide.




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¶ 20                                 B. The Discovery Rule

¶ 21       The Krops urge the court to apply the “discovery rule.” This rule delays the start
       of the limitations period until the claimant knew or reasonably should have known
       of the injury and that the injury was wrongfully caused. Hermitage Corp., 166 Ill.
       2d at 77; Knox College v. Celotex Corp., 88 Ill. 2d 407, 414 (1981). Illinois courts
       have applied this rule in certain circumstances to alleviate the harsh consequences
       of statutes of limitations. Knox College, 88 Ill. 2d at 414. When a complainant
       should have discovered an injury is a question of fact, but this court can determine
       when the limitations period began if the facts are undisputed and only one answer is
       reasonable. Jackson Jordan, Inc. v. Leydig, Voit & Mayer, 158 Ill. 2d 240, 250
       (1994).

¶ 22       Many Illinois cases have found that insurance customers should know the
       specifics of their policy as soon as they purchase it. The appellate court has
       imposed on insurance customers an obligation to read their policies and understand
       the terms. See, e.g., RVP, LLC v. Advantage Insurance Services, Inc., 2017 IL App
       (3d) 160276, ¶ 32; Garrick v. Mesirow Financial Holdings, Inc., 2013 IL App (1st)
       122228, ¶ 49; Perelman, 298 Ill. App. 3d at 1011. In Hoover, 2012 IL App (1st)
       110939, the appellate court concluded that the plaintiffs should have known the
       specifics of their policy when they first purchased it. The Hoovers had met with
       their insurance agent about adding a section to their existing policy that would
       cover the cost to replace their home and possessions if they were damaged. After an
       explosion destroyed their home, the insurer covered less than 80% of the
       replacement costs because the new section in the Hoovers’ policy specified this
       liability limit. Id. ¶ 17. When the Hoovers sued for negligence, the insurer claimed
       that the Hoovers should have known about the liability limit more than two years
       earlier and the suit was untimely. The court agreed with the insurer that the Hoovers
       could have read the policy and known about the liability limit as soon as they
       received the new policy. Id. ¶ 60.

¶ 23       The Krops ask this court to disregard these precedents and follow the appellate
       court’s reasoning. The appellate court here applied the discovery rule and delayed
       the start of the limitations period. Krop, 2017 IL App (1st) 161071, ¶ 16. It cited
       two appellate court cases addressing the statute of limitations for negligent failure
       to procure insurance: Broadnax v. Morrow, 326 Ill. App. 3d 1074 (2002), and




                                               -7­
       Perelman, 298 Ill. App. 3d 1007. Krop, 2017 IL App (1st) 161071, ¶¶ 16, 20. In
       each of these cases, an insurance customer sued an insurance broker claiming
       negligent failure to procure the requested insurance policy. Unlike “captive agents”
       who work for one insurance company exclusively, insurance brokers work for their
       customers and provide insurance policies from multiple companies. Skaperdas,
       2015 IL 117021, ¶ 19. The Broadnax and Perelman courts found that insurance
       brokers owed customers a fiduciary duty. This duty exists in certain relationships
       where “one party places trust in another so that the latter gains superiority and
       influence over the former.” Prime Leasing, Inc. v. Kendig, 332 Ill. App. 3d 300,
       313 (2002). In both Broadnax and Perelman, the appellate court found that this
       fiduciary duty imposed a greater obligation on insurance brokers to ensure that
       their customers understood the specifics of their new policies. Broadnax, 326 Ill.
       App. 3d at 1079; Perelman, 298 Ill. App. 3d at 1011.

¶ 24       Following Broadnax and Perelman, the appellate court concluded that barring a
       negligence claim against any insurance producer regardless of when the customer
       discovered the injury would be inconsistent with the fiduciary duty. 2017 IL App
       (1st) 161071, ¶¶ 16, 20, 34-35. It applied the discovery rule to delay the start of the
       limitations period until the Krops learned of the injury and that it was wrongfully
       caused, which it determined was when American Family denied the Krops
       coverage in August 2014. Id. ¶ 35.

¶ 25       In addition to Broadnax and Perelman, the Krops and the appellate court relied
       on Scottsdale Insurance Co. v. Lakeside Community Committee, 2016 IL App (1st)
       141845. In Scottsdale, the appellate court found that the cause of action accrued
       when the insurer first denied coverage and not when the insured first purchased the
       policy. Id. ¶ 2. Scottsdale arose after a young child died while Lakeside
       Community Committee (Lakeside) was providing child welfare services to the
       child and her mother. Id. ¶ 1. When the public guardian sued Lakeside for wrongful
       death, Lakeside’s insurer, Scottsdale, denied coverage. Id. ¶ 2. Lakeside assigned
       its own claims to the public guardian, which alleged that Scottsdale’s agent
       negligently failed to procure the insurance policy that Lakeside had requested. Id.
       In rejecting Scottsdale’s argument that the statute of limitations barred the claim,
       the appellate court agreed with Broadnax that Lakeside would not have known the
       extent of its coverage until the insurer denied coverage. Id. ¶¶ 31, 36, 38.




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¶ 26        The Krops’ reliance on Broadnax and Perelman is misplaced. See also id.
        ¶¶ 29-31, 38; State Farm Fire & Casualty Co., 394 Ill. App. 3d at 565-66; General
        Casualty Co. of Illinois v. Carroll Tiling Service, Inc., 342 Ill. App. 3d 883,
        899-900 (2003). The court in Broadnax based its decision on the insurance broker’s
        fiduciary duty, but insurance agents do not owe customers a fiduciary duty. At the
        time of the facts in Broadnax and Perelman, such a duty existed for insurance
        brokers, who procured policies for customers but did not work for any one
        insurance company. Skaperdas, 2015 IL 117021 ¶¶ 19, 22; Broadnax, 326 Ill. App.
        3d at 1079; Perelman, 298 Ill. App. 3d at 1011. In contrast, insurance agents
        worked for a particular company and owed obligations to their employer as well as
        their customer. Skaperdas, 2015 IL 117021, ¶¶ 19, 22.

¶ 27       In 1997, the General Assembly enacted the Insurance Placement Liability Act.
        Section 2-2201 provides:

           “No cause of action brought by any person or entity against any insurance
           producer, registered firm, or limited insurance representative concerning the
           sale, placement, procurement, renewal, binding, cancellation of, or failure to
           procure any policy of insurance shall subject the insurance producer, registered
           firm, or limited insurance representative to civil liability under standards
           governing the conduct of a fiduciary or a fiduciary relationship except when the
           conduct upon which the cause of action is based involves the wrongful
           retention or misappropriation by the insurance producer, registered firm, or
           limited insurance representative of any money that was received as premiums,
           as a premium deposit, or as payment of a claim.” Pub. Act 82-280 (eff. Jan. 1,
           1997) (enacting 735 ILCS 5/2-2201(b)).

¶ 28	   This statute prevents any insurance producer from being held to the fiduciary
        standard, except in a narrow set of circumstances not relevant to this case. 735
        ILCS 5/2-2201(b) (West 2014). Instead insurance producers have only a general
        duty to exercise ordinary care. Id. § 2-2201(a). In Skaperdas, this court held that the
        general duty applies to both agents and brokers. 2015 IL 117021, ¶¶ 35, 37. This
        statute makes clear that Varga owed no fiduciary obligations to the Krops.

¶ 29        Because a claim for negligent failure to procure insurance does not involve a
        fiduciary duty, insurance customers’ obligation to read their policies controls. See
        RVP, LLC, 2017 IL App (3d) 160276, ¶ 32; Hoover, 2012 IL App (1st) 110939,



                                                 -9­
       ¶ 60. Customers generally know their own goals better than their insurance agent
       does, but determining if a policy achieves those goals will be difficult when
       customers do not read the policy. Expecting customers to read their policies and
       understand the terms incentivizes them to act in good faith to purchase the policy
       they actually want, rather than to delay raising an issue until after the insurer has
       already denied coverage. See Hermitage Corp., 166 Ill. 2d at 77 (noting that cause
       of action for contract actions accrues at moment of breach, not injury). Moreover,
       insurance customers frequently maintain the same insurance policy for years,
       perhaps decades, at a time. If the cause of action did not accrue until the insurance
       producer notified the customer of an uninsured liability, insurance customers
       would benefit from their policy throughout the intervening period, while evidence
       potentially relevant to the insurer’s defense would be at risk of deterioration.
       Therefore, because insurance customers can read their policies and learn of any
       defects, the discovery rule typically will not delay the start of the two-year
       limitations period for negligent failure to procure insurance.

¶ 30       Decisions of other state supreme courts support this conclusion. The Rhode
       Island, Indiana, Mississippi, Delaware, and Maine Supreme Courts have agreed
       that insurance customers can learn the extent of their coverage by reading their
       policies. Faber v. McVay, 155 A.3d 153, 158 (R.I. 2017); Groce v. American
       Family Mutual Insurance Co., 5 N.E.3d 1154 (Ind. 2014); Filip v. Block, 879
       N.E.2d 1076, 1084 (Ind. 2008); Oaks v. Sellers, 2006-IA-00005-SCT (¶ 23) (Miss.
       2007); Kaufman v. C.L. McCabe & Sons, Inc., 603 A.2d 831, 835 (Del. 1995);
       Chiapetta v. Clark Associates, 521 A.2d 697, 700 (Me. 1987).

¶ 31       Admittedly, the courts of other states are far from unanimous on when the cause
       of action accrues in such cases and when insurance customers should discover their
       potential claims. See Stephens v. Worden Insurance Agency, LLC, 859 N.W.2d
       723, 732-33 (Mich. Ct. App. 2014) (cataloguing different approaches to the accrual
       date); M.S.S. Construction Corp. v. Century Surety Co., No. 15 Civ. 2801(ER),
       2015 WL 6516861, at *12 (S.D.N.Y. Oct. 28, 2015) (discussing conflict within
       New York state courts over whether the cause of action accrued at the time of the
       breach or when the insurer first denied coverage).

¶ 32       A few courts have taken the Krops’ position that the discovery rule delays the
       limitations period until after the insurance customers learn that they have incurred




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       expenses from an uninsured liability. Gudenau & Co. v. Sweeney Insurance, Inc.,
       736 P.2d 763, 767 (Alaska 1987); International Mobiles Corp. v. Corroon &
       Black/Fairfield & Ellis, Inc., 560 N.E. 2d 122, 124 (Mass. App. Ct. 1990);
       American Home Assurance Co. v. Osborn, 422 A.2d 8, 16 (Md. Ct. Spec. App.
       1980); Kelly v. H.C. Kerstetter Co., No. 696 MDA 2015, 2016 WL 1728686, at
       *4-5 (Pa. Super. Ct., Apr. 27, 2016).

¶ 33       Some state courts also have found that the cause of action accrues when the
       insured incurs losses because of an uninsured liability, but they reached this
       conclusion without applying a discovery rule. See, e.g., Blumberg v. USAA
       Casualty Insurance Co., 790 So. 2d 1061, 1065 (Fla. 2001); Hickox v. Stover, 551
       So. 2d 259, 264 (Ala. 1989); Chiapetta, 521 A.2d at 700; Spurlin v. Paul Brown
       Agency, Inc., 454 P.2d 963 (N.M. 1969); see also, LGR Realty, Inc. v. Frank &
       London Insurance Agency, 152 Ohio St. 3d 517, 2018-Ohio-334, 98 N.E.3d 241,
       ¶ 40 (DeWine, J., concurring, joined by O’Connor, C.J.) (discussing ambiguities in
       Ohio law but noting Ohio cases holding that the discovery rule does not apply in
       any professional negligence suit); Johnson & Higgins of Texas, Inc. v. Kenneco
       Energy, Inc., 962 S.W.2d 507, 514-15 (Tex. 1998). But cf. Rice v. Louis A.
       Williams & Associates, Inc., 86 S.W.3d 329, 339-40 (Tex. Ct. App. 2002).

¶ 34       These courts relied on two key premises: that the injury for which the plaintiffs
       sought a remedy was a liability that their policy did not cover and that the plaintiffs
       could not assert their claim until they encountered such a liability. See, e.g.,
       Gudenau & Co., 736 P.2d at 766; Kelly, 2016 WL 1728686, at *4; American Home
       Assurance Co., 422 A.2d at 16 (explaining that the cause of action cannot accrue
       until there is some “legal harm”). The Alaska Supreme Court’s decision in Austin v.
       Fulton Insurance Co., 444 P.2d 536 (Alaska 1968), is characteristic of this
       approach. Austin explained that the cause of action for a tort cannot accrue until the
       tort is complete, that the tort is not complete until the harm occurs, and that the
       relevant harm was the uninsured liability, not simply the defective policy. Id. at
       539. This was the background context to which the Alaska Supreme Court applied
       the discovery rule in Gudenau & Co., 736 P.2d at 766; see also Pichowicz v.
       Watson Insurance Agency Inc., 768 A.2d 1048 (N.H. 2001); International Mobiles
       Corp., 560 N.E.2d at 124; Williams v. Hilb, Rogal & Hobbs Insurance Services of
       California, Inc., 98 Cal. Rptr. 3d 910, 924 (Ct. App. 2009).




                                               - 11 ­
¶ 35       We reject these premises and instead agree with the Indiana and Delaware
       courts. Filip, 879 N.E.2d at 1076; Kaufman, 603 A.2d at 834. Because Illinois
       treats negligent failure to procure insurance as a tort arising out of a contract, “the
       cause of action ordinarily accrues at the time of the breach of contract, not when a
       party sustains damages.” Hermitage Corp., 166 Ill. 2d at 77. Neither party disputes
       that the breach occurred when Varga delivered the allegedly nonconforming
       policy. See Easterly v. Metropolitan Life Insurance Co., No.
       2006-CA-001580-MR, 2009 WL 350595, at *6 (Ky. Ct. App. Feb. 13, 2009).
       Although the discovery rule delays the start of the limitations period until the
       plaintiff should discover the injury, we find that insurance customers are injured as
       soon as an insurance producer delivers a policy that does not conform to the
       customers’ request. The Krops’ alleged injuries included not only their uninsured
       liability in Andreolas’s lawsuit but also their lack of coverage between the purchase
       of the policy in 2012 and the lawsuit in 2014. The damages may have increased
       when Andreolas sued, but the alleged injury began when American Family and
       Varga provided the Krops with an insurance policy that did not conform to their
       request. Filip, 879 N.E.2d at 1083; Kaufman, 603 A.2d at 834; see also Restatement
       (Second) of Torts § 7 (1965) (distinguishing between a “harm,” which requires a
       loss or detriment, and the broader “injury,” which may exist without any harm
       occurring); Nolan v. Johns-Manville Asbestos, 85 Ill. 2d 161, 171 (1981). The
       cause of action accrues as soon as the plaintiff should discover some injury, even if
       the full extent of the injury is not evident. Golla v. General Motors Corp., 167 Ill.
       2d 353, 364, 367 (1995).

¶ 36       Although customers should read their policy and discover any defects, we
       recognize that there will be a narrow set of cases in which the policyholder
       reasonably could not be expected to learn the extent of coverage simply by reading
       the policy. In some cases the insurance policies may contain contradictory
       provisions or fail to define key terms. In others the circumstances that give rise to
       the liability may be so unexpected that the typical customer should not be expected
       to anticipate how the policy applies. For example, the highly unusual circumstances
       of Scottsdale, involving the murder of a young child in the custody of the
       Department of Children and Family Services, were not likely imagined by




                                               - 12 ­
       Lakeside when it purchased the policy. 1 Scottsdale, 2016 IL App (1st) 141845,
       ¶¶ 36-37; see also Groce, 5 N.E.3d at 1159 (finding that although “ ‘reasonable
       reliance upon an agent’s representations can override an insured’s duty to read the
       policy,’ ” the insurance agent’s statement that he would have the agreement
       “ ‘written up’ ” was not a sufficient representation to absolve the customers of the
       obligation to read their own policy (quoting Fillip, 879 N.E. 2d at 1084)).

¶ 37       The alleged facts of this case do not present such an exceptional circumstance
       where a customer reasonably should not be expected to understand the terms of the
       policy. The American Family policy covered legal liability only if it resulted from
       “bodily injury or property damage.” The first page of the policy includes a
       “DEFINITIONS” section that explicitly states that “[b]odily [i]njury does not
       include *** emotional or mental distress, mental anguish, mental injury, or any
       similar injury unless it arises out of actual bodily harm to the person.” This clearly
       differs from the Travelers policy, which states that Travelers would provide
       coverage “for damages because of ‘bodily injury,’ ‘personal injury,’ or ‘property
       damage.’ ” The Travelers policy defines “personal injury” to include “[l]ibel,
       slander or defamation of character” and “[i]nvasion of privacy.” The difference
       between the two policies was apparent. These details closely resemble the facts of
       Hoover, where the 80% liability limit was clearly expressed on the face of the
       policy. Hoover, 2012 IL App (1st) 110939, ¶¶ 58-61.

¶ 38       The Krops have not pleaded facts showing that they could not have read their
       American Family policy and understood its terms, so the cause of action accrued
       when they first purchased their policy. The parties agree that American Family
       issued the policy on March 21, 2012. 2 The Krops do not claim that they never
       received the policy or had no copy available to them. Because they were obligated
       to read the policy and understand its terms, this is also the earliest date when they

           1
             Although the Scottsdale court erred by relying on Broadnax, its reasoning based on Indiana
       Insurance Co. and for distinguishing Hoover remains persuasive. Scottsdale, 2016 IL App (1st)
       141845, ¶¶ 36-37.
            2
             The exact date that the Krops received a copy of the American Family policy does not appear
       in the record. However, the Krops do not dispute March 21, 2012, as the date that American Family
       issued the policy, and they do not suggest that they received a copy much later. Even if March 21,
       2012, is not the exact date that they had the opportunity to read the policy, they had the opportunity
       soon after. Whatever exact date the cause of action accrued in spring 2012, the suit in September
       2015 was certainly more than two years after that date.




                                                      - 13 ­
       reasonably should have known that Varga had not provided them with an American
       Family policy that covered all the same liabilities as the Travelers policy. Their
       cause of action against Varga for negligent failure to procure insurance accrued on
       March 21, 2012, and the two-year limitations period ended on March 21, 2014.
       Because the Krops brought their claim on September 3, 2015, that claim was
       untimely.


¶ 39                                     CONCLUSION

¶ 40       The Krops’ claim was barred by the limitations period for claims against
       insurance producers in section 13-214.4 of the Code. We reverse the appellate
       court’s decision and affirm the circuit court’s order granting Varga’s motion to
       dismiss under section 2-619 of the Code.


¶ 41      Appellate court judgment reversed.

¶ 42      Circuit court judgment affirmed.


¶ 43      JUSTICE THEIS, dissenting:

¶ 44       The threshold question in this case is the proper characterization of the
       third-party action filed by the Krops against Andrew Varga, an American Family
       agent, under section 2-2201 of the Code (735 ILCS 5/2-2201 (West 2014)). When
       this action is properly characterized as a negligence action, it is evident that the
       cause of action accrued upon American Family’s denial of the Krops’ claim for
       coverage. Thus, when the Krops filed their third-party complaint for negligent
       procurement, the two-year limitations period had not run. Accordingly, I would
       affirm the appellate court’s judgment that reversed the trial court’s dismissal of the
       Krops’ cause of action as untimely.

¶ 45      The two-year statute of limitations in section 13-214.4 of the Code
       encompasses claims by an insured against an insurance producer, including Varga.
       That section provides that “[a]ll causes of action brought by any person or entity
       under any statute or any legal or equitable theory against an insurance producer ***
       concerning the *** procurement *** of, or failure to procure any policy of




                                               - 14 ­
       insurance shall be brought within 2 years of the date the cause of action accrues.”
       735 ILCS 5/13-214.4 (West 2014).

¶ 46        The accrual date depends upon how the cause of action is characterized.
       Historically, liability for the failure to procure insurance arose under various
       theories of tort and contract, and it often depended on the distinctions between
       insurance brokers and captive insurance agents. In these cases, depending upon the
       relationship, liability was said to be based on the agreement between the
       prospective insured and the insurance broker to procure a certain policy, based on a
       fiduciary relationship with its principal, or based on other negligence principles.
       See, e.g., Scarsdale Villas Associates, Ltd. v. Korman Associates Insurance
       Agency, Inc., 178 Ill. App. 3d 261, 264 (1988) (action for breach of a contract to
       procure insurance and negligent misrepresentation); Gothberg v. Nemerovski, 58
       Ill. App. 2d 372 (1965) (action for breach of a contract to procure); Black v. Illinois
       Fair Plan Ass’n, 87 Ill. App. 3d 1106, 1110 (1980) (action for negligent
       procurement arising from a breach of fiduciary duties); Talbot v. Country Life
       Insurance Co., 8 Ill. App. 3d 1062, 1065 (1973) (action for negligent procurement
       based on an affirmative undertaking to perform a service to another to either
       provide the desired coverage or notify the applicant of the rejection of the risk “so
       that he may not be lulled into a feeling of security or put to prejudicial delay in
       seeking protection elsewhere”).

¶ 47       In 1996, the General Assembly enacted section 2-2201 of the Code, which
       addressed the liability of insurance producers in relation to the procurement of
       insurance. See Pub. Act 89-638, § 5 (eff. Jan. 1, 1997) (adding 735 ILCS 5/2-2201).
       Section 2-2201(a) imposes negligence liability on an insurance producer, including
       both brokers and captive agents, by imposing a duty to “exercise ordinary care and
       skill in renewing, procuring, binding, or placing the coverage requested by the
       insured or proposed insured.” 735 ILCS 5/2-2201(a) (West 2014); Skaperdas v.
       Country Casualty Insurance Co., 2015 IL 117021, ¶ 25. Although the statute
       removed the common-law basis for distinguishing between insurance brokers and
       insurance agents, and limited the scope of breach of fiduciary duty claims, the
       statute does not release an insurance producer from liability for negligence (735
       ILCS 5/2-2201(d) (West 2014)), and subsection (a) specifically provides for a
       cause of action in negligence (id. § 2-2201(a)); Skaperdas, 2015 IL 117021, ¶ 24.




                                               - 15 ­
¶ 48       Here, the Krops alleged that Varga was negligent in failing to procure the
       insurance coverage that they requested pursuant to section 2-2201 of the Code. As
       we explained in Skaperdas, the statutory duty of ordinary care arising from
       subsection (a) arises once coverage is “ ‘requested by the insured or proposed
       insured.’ ” Skaperdas, 2015 IL 117021, ¶¶ 37, 42 (quoting 735 ILCS 5/2-2201(a)
       (West 2010)). Once such coverage is requested, insurance producers “exercise
       ordinary care and skill in responding to the request, ‘either by providing the
       desirable coverage or by notifying the applicant of the rejection of the risk.’ ” Id.
       ¶ 37 (quoting Talbot, 8 Ill. App. 3d at 1065). If an insurance producer cannot offer
       the coverage requested, it may satisfy the statutory duty by notifying the customer
       to look elsewhere for the requested coverage. Id. ¶ 39. We further explained in
       Skaperdas that the duty does not depend upon either a contractual relationship or a
       fiduciary one. Id. ¶¶ 25-26.

¶ 49       As a result, where the statute specifically provides for a negligence action, the
       duty as defined in section 2-2201(a) does not depend upon any contractual
       relationship, and the Krops do not seek recovery for mere negligent performance of
       a contractual duty, the proper characterization of their claim is an ordinary
       negligence action, which is a tort-based claim. See, e.g., Melrose Park Sundries,
       Inc. v. Carlini, 399 Ill. App. 3d 915, 919 (2010) (characterizing and analyzing the
       claim against an insurance producer under section 2-2201 as a negligence action);
       Mercola v. Abdou, 223 F. Supp. 3d 720, 728-29 (N.D. Ill. 2016) (finding that the
       provisions of section 2-2201 sound in the language of tort).

¶ 50        Next, we must consider when a cause of action accrues for a negligence claim.
       Generally, we have recognized that tort actions have been treated differently than
       contract actions. Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 77
       (1995). Tort actions generally accrue at the time of injury. Id. (citing West
       American Insurance Co. v. Sal E. Lobianco & Son Co., 69 Ill. 2d 126, 132 (1977)).
       In Khan v. Deutsche Bank AG, 2012 IL 112219, ¶ 20, this court explained that a
       cause of action “accrues” when “facts exist that authorize the bringing of a cause of
       action. “Thus, a tort cause of action accrues when all of its elements are present,
       i.e., duty, breach, and resulting injury or damage.” Id. (citing Brucker v. Mercola,
       227 Ill. 2d 502, 542 (2007)); see also Sundance Homes, Inc. v. County of Du Page,
       195 Ill. 2d 257, 266 (2001) (statute of limitations begins to run when the plaintiff
       “has the right to invoke the aid of the court to enforce his remedy”); Lobianco, 69




                                              - 16 ­
       Ill. 2d at 129-30 (cause of action based on tort accrues only when all the elements
       are present: duty, breach, and resulting injury or damage.)

¶ 51       Pursuant to our discovery rule, the limitations period is tolled and begins to
       commence when the plaintiff knew, or reasonably should have known, that the
       injury occurred and that it was wrongfully caused. Knox College v. Celotex Corp.,
       88 Ill. 2d 407, 414 (1981). At that point, the injured person possesses sufficient
       information concerning his injury and its cause to put a reasonable person on notice
       to make additional inquiries. Id. at 415. Neither party disputes the applicability of
       the discovery rule to this cause of action.

¶ 52       Thus, as applied in this context, before the tort could become actionable and
       before the limitations period could begin to run, there must be an injury to the
       plaintiff as a consequence of the insurance producer’s alleged negligence that could
       serve as a basis for the recovery of damages. The alleged injury arises when the
       plaintiff sustains a loss for which an insurance claim is not covered but would have
       been covered if the requested insurance had been properly procured or if the
       plaintiff had been timely notified of the rejection of the risk. Under the discovery
       rule, in this case, at the time the Krops received the denial of coverage letter from
       American Family in August 2014, they knew or should have known of their injury
       and that Varga might have been negligent.

¶ 53        Although the Krops were not required to know the “full extent” of the injury
       before the statute of limitations was triggered (Golla v. General Motors Corp., 167
       Ill. 2d 353, 364 (1995)), prior to the denial of coverage, any injury was purely
       contingent and speculative. See, e.g., Stephens v. Worden Insurance Agency, LLC,
       859 N.W.2d 723, 733-34 (Mich. Ct. App. 2014) (negligent procurement claim
       accrues when the insurer denies the insured’s claim because “on that date any
       speculative injury becomes certain, and the elements of the negligence action are
       complete”); International Mobiles Corp. v. Corroon & Black/Fairfield & Ellis,
       Inc., 560 N.E.2d 122, 124 (Mass. App. Ct. 1990) (“[i]f no accident produces a
       claim, the failure will have been negligence in the abstract”); see also Austin v.
       Fulton Insurance Co., 444 P.2d 536, 539 (Ala. 1968) (until there was a loss for
       which the plaintiff was not protected, no legally protected interest had been
       invaded).




                                              - 17 ­
¶ 54       Accordingly, taking the allegations of the complaint in the light most favorable
       to the Krops, as required under section 2-619 of the Code (Porter v. Decatur
       Memorial Hospital, 227 Ill. 2d 343, 352 (2008)), their cause of action accrued in
       August 2014, when their claim for coverage under their homeowner’s insurance
       policy was denied. When they filed their third-party complaint in September 2015,
       the two-year limitations period had not yet run.

¶ 55       Instead of applying these well-settled accrual principles in negligence actions,
       the majority applies accrual theories relating to contracts and “torts arising out of
       contractual relationships” to conclude that the Krops’ cause of action accrued at the
       time of the breach. Supra ¶¶ 17-18, 35. To support this theory, the majority relies
       primarily on a series of cases involving causes of action against insurance
       producers, including Hoover v. Country Mutual Insurance Co., 2012 IL App (1st)
       110939, ¶ 52; State Farm Fire & Casualty Co. v. John J. Rickhoff Sheet Metal Co.,
       394 Ill. App. 3d 548, 565 (2009); and Indiana Insurance Co. v. Machon & Machon,
       Inc., 324 Ill. App. 3d 300, 303-04 (2001).

¶ 56        Although those cases indeed use this hybrid term of a “tort arising out of a
       contractual relationship,” like the majority, none of these cases explain the
       doctrinal underpinnings of such a cause of action or explain the contours of these
       types of hybrid claims in the context of section 2-2201. The Hoover and State Farm
       cases rely on the Machon case. Machon involved a contractual relationship
       between an insurer and its agent. Machon, in turn, relies primarily on Lobianco, 69
       Ill. 2d 126. Lobianco was not a case involving insurance producers or the negligent
       procurement of insurance. Lobianco relies, in turn, on the nineteenth-century case
       of Pennsylvania Co. v. Chicago, Milwaukee & St. Paul Ry. Co., 144 Ill. 197 (1893),
       involving common carriers for hire and their negligent conduct in transporting
       certain goods. Additionally, the majority relies on Hermitage Corp., 166 Ill. 2d at
       77, where this court relied on Lobianco, in a case where the parties agreed that a
       negligence claim arose out of a breach of an oral contract, in considering the
       five-year statute of limitations on unwritten contracts. The majority fails to
       recognize that none of these cases inform our analysis here.

¶ 57      Significantly, the majority never identifies a contract from which this
       negligence action arises. The majority does not suggest that the contract at issue is




                                              - 18 ­
       the insurance policy itself. Nor has it identified any conduct that would constitute a
       contract.

¶ 58       Furthermore, neither the majority opinion nor the cases it relies upon explain
       how applying this hybrid cause of action and contract accrual principles would
       survive the economic loss doctrine in this context. In Moorman Manufacturing Co.
       v. National Tank Co., 91 Ill. 2d 69, 86 (1982), this court held that generally a
       plaintiff cannot recover in tort for solely economic losses, limiting recovery to
       contract damages. This doctrine has been applied to liability premised on the mere
       negligent performance of a contractual obligation where the duty is defined by the
       contract executed with the client. See 2314 Lincoln Park West Condominium Ass’n
       v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302, 317 (1990). However, we have
       explained that, where the duties owed arise outside of the contract, the plaintiff may
       seek recovery in tort for breach of those independent duties. Congregation of the
       Passion, Holy Cross Province v. Touche Ross & Co., 159 Ill. 2d 137, 162 (1994).
       The majority has made no effort to fit this hybrid cause of action and its application
       of contract accrual principles into any exception to the economic loss doctrine.

¶ 59       With no attempt by the case law to explain why contract accrual principles
       apply to a negligent procurement claim under section 2-2201, it appears that prior
       cases chose this analytical framework on purely public policy grounds. Hermitage,
       for example, expressed the “concern that plaintiffs will delay bringing suit after a
       contract is breached in order to increase damages.” Hermitage, 166 Ill. 2d at 77.
       However, in adopting section 2-2201(a), the legislature has expressed the public
       policy of this state to be that insurance producers, whether brokers or captive
       agents, have a duty of ordinary care and that liability rests in negligence principles,
       allowing recovery in tort. 735 ILCS 5/2-2201(d) (West 2014) (“the provisions of
       this [s]ection do not limit or release an insurance producer *** from liability for
       negligence concerning the *** procurement *** or failure to procure any policy of
       insurance”).

¶ 60       As a matter of statutory interpretation, we must construe the language as written
       without reading into it exceptions, limitations, or conditions the legislature did not
       express. Moon v. Rhode, 2016 IL 119572, ¶ 22. Nothing in the language of section
       2-2201 suggests that the cause of action is a “tort arising out of a contractual
       relationship” or implicates contract theories. We cannot read these contract ideas




                                               - 19 ­
       into the plain language of the statute. Indeed, we explained in Skaperdas that the
       duties owed under section 2-2201 do not depend upon any contract. Skaperdas,
       2015 IL 117021, ¶ 25. Nor can we add language to the statute of limitations as
       provided in section 13-214.4. Nothing in the language of that section suggests that
       the legislature meant to incorporate contract accrual principles. 735 ILCS
       5/13-214.4 (West 2014).

¶ 61       The suspect logic in the majority’s opinion is laid bare by its reliance on
       Hermitage. Recognizing that the statute of limitations does not define what
       constitutes accrual, the majority relies on Hermitage as authority to “fill this gap”
       in the statute. Supra ¶ 17. The language quoted from Hermitage is accurate but
       ignores the context.

¶ 62       The Hermitage case involved a claim by a mechanic’s lienholder who sued the
       preparer of the lien for negligence, negligent and unauthorized practice of law,
       consumer fraud, and breach of warranty. Hermitage, 166 Ill. 2d at 75-76. The
       parties agreed that these common-law theories, other than fraud, arose from an oral
       contract for services to which a five year statute of limitations applied. Id. at 76.
       The causes of action were not based on any statute.

¶ 63       Unlike Hermitage, in this case, there is no gap to be filled. Section 2-2201
       simply articulates a cause of action for negligence. Under the statute, the Krops
       presented a cause of action for negligence, and the statute of limitations for that
       claim was triggered by normal negligence accrual principles.

¶ 64       Furthermore, the majority concludes that the discovery rule will typically not
       delay the accrual period because an insurance customer’s duty to read the policy
       generally acts to put the customer on notice of the injury. This conclusion is
       premised on the erroneous notion that the injury accrues when the plaintiff is issued
       a policy that does not cover all of the possible contingent future liability that would
       have been covered under the requested policy. As explained, the breach itself is not
       actionable. No negligent procurement action could arise until there was a loss for
       which an insurance claim was made and denied because, until that moment, there
       could be no actual damages.

¶ 65       Although the accrual issue has received diverse treatment in other jurisdictions,
       to hold that the date the injury accrues is the date of the negligent act allows the




                                               - 20 ­
       cause of action to be barred before any actionable injury resulted. If plaintiffs had
       brought suit in 2012 when they received the allegedly defective policy, their
       complaint would not have survived a section 2-615 motion to dismiss because no
       actual damages had yet occurred. Under the majority’s view, the cause of action for
       negligent procurement by an insurance producer under section 2-2201 is essentially
       a dead letter if the underlying liability claim is not brought within two years from
       the date the policy was issued.

¶ 66       Under these circumstances, the statute of limitations essentially becomes a
       statute of repose, contrary to the legislative intent of section 13-214.4. 735 ILCS
       5/13-214.4 (West 2014). Had the legislature sought this outcome, it could have
       drafted the statute of limitations to expressly state that a cause of action concerning
       an insurance producer’s procurement of insurance shall be brought within two
       years of the date the policy of insurance was issued. It did not do so.

¶ 67       Whether a corresponding duty to read the policy may be alleged as an
       affirmative defense to a claim for negligent procurement is a separate question,
       involving the merits of plaintiffs’ cause of action. However, the majority’s
       conclusion eviscerates the duty of the insurance producer to notify a prospective
       insured of the rejection of the risk. Skaperdas, 2015 IL 117021, ¶ 37. Moreover,
       whether the deficiencies in a policy are readily apparent from reading it may
       involve questions for the trier of fact, including the sophistication of the insured
       and the complexity of the policy. These questions, however, are not at issue here on
       a motion to dismiss.

¶ 68       In sum, this is a tort action and should be analyzed under the proper tort
       framework. Interpreting the cause of action in this manner effectuates the statute’s
       legislative intent to impose this legal duty as a matter of policy. To construe the
       cause of action as a tort arising out of a contractual relationship defeats the purpose
       of section 2-2201 by rendering negligence actions against insurance producers for
       failure to procure requested insurance an illusory form of recovery for resulting
       damage that ensues. Accordingly, I respectfully dissent.

¶ 69      JUSTICE KILBRIDE joins in this dissent.




                                               - 21 ­
