Abstract
Illinois’ Interest Act provides for prejudgment interest on money due on an “instrument of writing” like an insurance policy. Although not in the statute’s language, Illinois courts have long applied a common law rule that restricts awards of such interest to cases in which the amount owed is easily calculable. That easily calculable requirement has figured prominently in defeating interest awards in cases where insurers have breached their policy obligations to defend lawsuits against policyholders. In several such cases, courts have applied the requirement to refuse interest on defense costs those insurers owed because they disputed the reasonableness of those costs. The Article maintains that the easily calculable requirement should not bar awarding interest in such duty to defend cases and that courts should award interest on the defense costs that were reasonably incurred. It recounts that the easily calculable requirement was developed when courts viewed prejudgment interest as a form of punishment to protect debtors who could not pay on time due to uncertainty of what they owed. The Article asserts that enforcing that requirement now is out of step with the modern purpose of prejudgment interest, which is compensating a wronged party for the time value of withheld funds, and that the requirement’s initial purpose is not served by protecting insurers who refused to defend at all.
Recommended Citation
Stanley C. Nardoni,
A Lack of Interest: Why Illinois’ “Easily Calculable” Requirement Should Not Defeat Prejudgment Interest for Policyholders on Unpaid Defense Costs,
49
S. Ill. U. L.J.
701
(2025).
Available at:
https://opensiuc.lib.siu.edu/siulj/vol49/iss4/8