203 F.3d 449 (7th Cir. 2000)
WILLIS CORROON CORPORATION,    Plaintiff-Appellee,v.THE HOME INSURANCE COMPANY and  RISK ENTERPRISE MANAGEMENT LIMITED,    Defendants-Appellants.
No. 99-1799
In the  United States Court of Appeals  For the Seventh Circuit
Argued December 3, 1999Decided February 10, 2000Rehearing and Rehearing En BancDenied March 29, 2000.

Appeal from the United States District Court  for the Southern District of Illinois.  No. 97-810-GPM--G. Patrick Murphy, Judge.
Before FLAUM, ROVNER, and EVANS, Circuit Judges.
EVANS, Circuit Judge.


1
This action, which should  be a run-of-the-mill dispute over insurance  coverage, has taken several bad turns,  necessitating a court trial on whether The Home  Insurance Company was estopped from denying  coverage to its insured, the Willis Corroon  Corporation. The result was a finding of  estoppel. Furthermore, Willis Corroon was granted  attorney fees, costs, and a statutory penalty  under sec. 155 of the Illinois Insurance Code,  215 ILCS sec. 5/155.


2
The Willis Corroon Corporation is, among other  things, an insurance broker. It had a general  liability policy with a $1 million limit with The  Home and a $7 million umbrella policy, both with  exclusions for claims based on professional  services. It also had a professional liability  policy with an outfit called the Friar's Street  Insurance Limited. The dispute here grows out of  Willis Corroon's work as the project safety  manager (its employee, Thomas Heuer, was also  sued) on a construction site of the Scott Joint  Use Airport project in St. Clair County,  Illinois. A woman named Lynn Zurliene was hit by  a car while she was acting as flag person at the  site. She filed suit in St. Clair County circuit  court against Willis Corroon, Heuer, and other  defendants. Thinking that the incident implicated  its duties as project safety manager, Willis  Corroon notified The Home of the claim and  tendered its defense, requesting that The Home  provide coverage for itself and Heuer.


3
The Home undertook the defense with a  reservation of rights, and attorney Jerome C.  Simon was hired and put on the case; Risk  Enterprise Management Limited (REM) was given the  management and administration of the defense. The  Zurliene case was set for trial on December 16,  1996. At no time prior to trial was Simon given  settlement authority, even though he asked for it  and advised The Home that settling would be wise.  The reserve The Home set aside for the suit  remained extremely low-- in March 1996 it was  $5,000, even though someone from The Home valued  the case at up to $110,000. At the same time,  Zurliene was making demands for $3 million. Also  duringthe pendency of the case, The Home refused  to pay the fees of an expert witness Simon wanted  to use. Late in the case, motions for summary  judgment were filed, based on a defense that  workers compensation was Zurliene's exclusive  remedy; the motion was not resolved because it  was untimely.


4
On December 6, 1996--just 10 days before the  scheduled trial date, The Home/REM sent attorney  Simon a letter advising him that he committed  legal malpractice when he failed to timely raise  the workers compensation defense. Simon was  advised to notify his malpractice insurer that it  could be responsible for the judgment or  settlement in the Zurliene action. Simon was  understandably shocked, and on December 9 he  asked the court for permission to withdraw from  the case. The trial judge found The Home's  conduct questionable and ordered it into court on  December 12 to explain itself. At a hearing on  December 12, Simon and local counsel were granted  leave to withdraw from their representation of  Willis Corroon. Although it found a lawyer to  represent its employees at the hearing, The Home  did not obtain alternate representation for  Willis Corroon, and no one asked for a  continuance of the trial date. With everything in  disarray, the case was settled when The Home paid  Zurliene $2 million.


5
Meanwhile, on December 10, 1996, one day after  Simon's request to withdraw from the Zurliene  case, The Home filed a declaratory judgment  action against Willis Corroon in the Middle  District of Tennessee, seeking a declaration that  it had no obligation to pay any judgment rendered  against Willis Corroon in the Zurliene case. On  December 12, 1996, Willis Corroon filed its own  declaratory judgment action against The Home and  REM in St. Clair County circuit court. That case  was removed to the United States District Court  for the Southern District of Illinois. On  November 14, 1997, the court in Tennessee  transferred its case to the Southern District of  Illinois. The two cases were consolidated and are  now before us.


6
In the district court, the cases spawned  motions, including motions for summary judgment.  Judge G. Patrick Murphy found that genuine issues  of material fact existed "as to whether Willis  Corroon was prejudiced by REM/The Home's  conduct." He determined to "conduct a trial on  the estoppel issue before reaching the coverage  issue because if the Court were to find that  REM/The Home was estopped from denying coverage  (i.e., that Willis Corroon was prejudiced by  REM/The Home's conduct), the Court would not need  to decide the coverage issue." On January 11,  1999, a bench trial was held on that issue. Judge  Murphy found that The Home's conduct of the  Zurliene case was, among other things, "ham-  handed," and "witless," and that it was estopped  from asserting policy defenses. Judge Murphy  stated:


7
First, REM/The Home's conduct prejudiced Willis  Corroon in that REM/The Home's actions on  December 6, 1996, deprived Willis Corroon of  effective counsel ten days before trial in the  Zurliene action. Second, despite repeated  requests by Simon and Scott, REM/The Home refused  to grant settlement authority prior to December  6, 1996, which deprived Willis Corroon of any  opportunity to settle the case within the limits  of the primary policy. Third, REM/The Home  deprived Willis Corroon of a crucial expert  witness by failing to pay the expert. Fourth,  REM/The Home effectively doubled the settlement  value of the case by its ham-handed and witless  management on the eve of trial. This was  occasioned by panic when REM/The Home finally  realized that its evaluation of the case and  corresponding reserves were unrealistic and  erroneous.


8
In addition, because The Home's conduct was also  "vexacious" and "unreasonable," Willis Corroon  was entitled to relief under sec. 155 of the  Illinois Insurance Code in the amount of  $163,653.96.


9
On appeal, The Home contends that there can be  no equitable estoppel when the insurer defends,  as it did, under a reservation of rights.  Furthermore, it says that the fact that it sought  a declaratory judgment regarding its duty to  defend the lawsuit prevents the application of  the doctrine of estoppel.


10
Under Illinois law (all agree that Illinois law  controls this dispute), when an insurer believes  that a policy does not provide coverage, it can  provide a defense under a reservation of rights  or obtain a declaratory judgment as to its rights  and obligations. Insurance Co. of Illinois v.  Federal Kemper Ins. Co., 683 N.E.2d 947 (Ill.  App. 1997). When the insurer chooses to defend  its insured it must provide an effective defense,  and it must not put its own interests ahead of  those claiming to be insureds. Briseno v. Chicago  Union Station Co., 557 N.E.2d 196 (Ill. App.  1990). If the insurer fails to meet these  obligations, and the insured is prejudiced, the  insurer can be estopped from asserting policy  defenses. Maryland Cas. Co. v. Peppers, 355  N.E.2d 24 (1976).


11
Most often a claim of estoppel is made when the  insurer has failed entirely to provide a defense,  has provided a defense without reserving its  rights, or has failed to seek a declaration of  its rights: "the insurer must either defend under  a reservation of rights or seek a declaratory  judgment that there is no coverage; if the  insurer fails to do so, it is estopped from  raising policy defenses . . . ." Sportmart, Inc.  v. Daisy Mfg. Co., 645 N.E.2d 360, 364 (Ill. App.  1994); see also Essex Ins. Co. v. Stage 2, Inc.,  14 F.3d 1178, 1182 (7th Cir. 1994). On appeal,  The Home turns this principle on its head. Not  only does an insurer have to provide a defense  under a reservation of rights or file for  declaratory judgment or it can be estopped from  asserting its defenses, but, The Home argues, so  long as the insurer has done either of those  things, estoppel can never lie.


12
The argument is overly sweeping. It is  inconceivable that Illinois would allow a  reservation of rights to give an insurer license  to prejudice its insured however it wanted. And  in fact it does not. Illinois courts have found  estoppel even when there has been a reservation  of rights. In Western Casualty & Surety Co. v.  Brochu, 475 N.E.2d 872 (1985), the court found  that "Western was reserving its rights based upon  exclusions (n) and (o) of the policy." At 878.  For that reason, the company was found not to  have waived its policy defenses. However, whether  estoppel applied was said to involve different  considerations. Despite the reservation of  rights, the court specifically found that the  insured "may be able to establish that it was  prejudiced by Western's subsequent conduct. An  insurer may be estopped from asserting a defense  of noncoverage if it undertakes the defense of an  action and that undertaking results in some  prejudice to the insured." At 879. In Employers  Insurance of Wausau v. Ehlco Liquidating Trust,  708 N.E.2d 1122, 1136 (1999), the court, in  discussing a failure to provide a defense, said  that an "insurer cannot simply abandon its  insured." As this case makes clear, there is more  than one kind of abandonment. Given the facts  before us, which as the district court found them  are not clearly erroneous, it is not error to  find that The Home is estopped from presenting  policy defenses.


13
The Home also argues, of course, that its  filing of an action for a declaratory judgment  prevents estoppel from being applied.  Furthermore, it says, the fact that the  declaratory judgment action was not filed until  a few days before the scheduled trial date is not  relevant. It is true that the Illinois Supreme  Court has recently said that an "insurer will not  be estopped from denying coverage merely because  the underlying case proceeds to judgment before  the declaratory judgment action isresolved."  State Farm Fire & Cas. Co. v. Martin, 710 N.E.2d  1228, 1232 (1999). In Martin the insurance  company filed its declaratory judgment action  soon after being notified of a wrongful death  claim against its insured. The insured was  accused of hiring someone to destroy a building  he owned; the building was set on fire and two  people died. The declaratory judgment action was  stayed pending the conclusion of the related  criminal case, and as a result of the stay no  decision was made in the declaratory judgment  action until after a default judgment had been  entered on the wrongful death claim. In deciding  that the failure to obtain a ruling in the  declaratory judgment action prior to the  resolution of the underlying case did not estop  the insurance carrier from asserting policy  defenses, the court was trying to prevent a race  to judgment or a situation in which an insurer  always had to provide a defense for fear the  declaratory judgment actions would not be timely  resolved.


14
That situation bears little resemblance to the  one before us. If anything, our situation comes  closer to that in Ehlco, in which the Illinois  Supreme Court stated that where "an insurer waits  to bring its declaratory judgment action until  after the underlying action has been resolved by  a judgment or a settlement, the insurer's  declaratory judgment action is untimely as a  matter of law." At 1138.


15
Here, The Home mishandled a defense which it  undertook under a reservation of rights. The  company created a situation in which its insured,  Willis Corroon, was left in the lurch. Then,  after it was clear that it had caused the loss of  Willis Corroon's ability to defend itself and a  settlement was desperately required, The Home  filed a declaratory judgment action in a district  court in another state. On these facts, were we  to say that because The Home reserved its rights  and filed a declaratory judgment before a verdict  or settlement was reached in the underlying  action it cannot be estopped from contesting  coverage, we would be allowing a blatant  manipulation of the law. It would be to encourage  the worst possible behavior. The Home failed to  provide an adequate defense, in fact completely  undermined the defense which it ostensibly  provided; the company cannot be saved by a  twelfth-hour filing of a declaratory judgment  action.


16
Because The Home is estopped from presenting  defenses to coverage, it follows that there is  coverage, and we need not consider The Home's  arguments regarding why coverage is lacking. The  argument that damages are improper under 215 ILCS  sec. 5/155 also need not detain us. The Home was  estopped to assert policy defenses, and the judge  found that the company acted in bad faith and  that its conduct was "vexatious and  unreasonable." A decision to award attorney fees  and costs under the statute is reviewed for an  abuse of discretion. Finding none, we conclude  that the award was appropriate. See Ehlco.


17
The Home also contends that it was an abuse of  discretion for the district court to deny the  company leave to file an amended complaint  asserting a "reverse bad faith" claim. Even  assuming that such a cause of action exists (a  very doubtful assumption), we disagree. The court  found that there was "absolutely no evidence of  bad faith or wrongdoing on the part of Willis  Corroon or any of the attorneys who represented  Willis Corroon in the underlying action."


18
Finally, before leaving this appeal we want to  emphasize that it's very helpful to us when  attorneys write their briefs with precision and  clarity. A statement like this, from The Home's  brief (one of several we could quote), falls  short of the mark:


19
Apparently, Willis Corroon urges this Court to  conflate the elements of estoppel for the  wrongful refusal to defend with the elements for  equitable estoppel, producing an alchemic cause  of action which strips an insurer of its policy  defensesfor taking actions in defense of the  underlying case which cause the settlement value  to increase from some arbitrarily-selected  earlier point in time where the insurer could  have settled for less.


20
The Home's reply brief, at 7.


21
Also troubling is a form of subtle misstatement  which exists in The Home's briefing, an example  of which we now note. The Home's first argument  in support of its appeal is, as presented in bold  type: "The District Court Erred in Finding That  The Home Was Estopped to Contest Coverage Under  Brochu as a Matter of Law." Subdivision A of that  argument, also in bold type, is "The Home  Defended Under a Reservation of Rights, Thus  There Can be No Equitable Estoppel." The argument  continues by saying that the line of authority  extending from Peppers "(upon which Brochu  relied) only applies where the insurer has  undertaken the defense of the insured without  reserving its rights[.]" (Emphasis in the  original.) But to the contrary, as we have  already discussed, Brochu itself is a case in  which there was clearly found to be a reservation  of rights, and estoppel was found to apply. It  would be one thing for The Home to argue that  Brochu is an anomaly or that it is simply wrong,  but it is entirely another thing to cite the case  and then misstate what it says. At argument, the  sleight of hand continued. Counsel for The Home,  while now perhaps acknowledging a reservation of  rights might exist in Brochu, said that there was  a question as to whether there was a proper  reservation of rights, implying, we believe, that  it was doubtful that Brochu was, in fact, a case  in which estoppel was found despite a clear  reservation of rights. It is true that the  insured in Brochu contested whether there was an  effective reservation of rights, but the supreme  court clearly and unmistakenly found there was a  reservation of rights:


22
This letter from Sullivan was addressed to Mark  III's private attorney, and it specifically  stated that Western was reserving its rights . .  . .


23
At 878. Despite the reservation of rights, the  supreme court found that estoppel applied. To say  otherwise is just not true.


24
We understand that sometimes misuse of precedent  occurs inadvertently. But it goes without saying  that attorneys should make every effort to ensure  that their statements to us (or any court,  actually) are accurate.


25
The decision of the district court is AFFIRMED.

