Business Owners Beware – Illinois has Expanded the Recoverability of Pre-Judgment Interest
It is rare if a business has not experienced a bodily injury claim such as a slip-and-fall in a retail store, or an accident at a construction site. In Illinois, those claims are ordinarily governed by common law negligence principles. An injured party who prevailed at trial was entitled to recover medical expenses, loss of earnings, pain and suffering, loss of normal life, disfigurement, increased risk of future harm, and 9% annual post-judgment interest—but not pre-judgment interest.
That has changed, and businesses should be aware that an injured party can now recover pre-judgment interest pursuant to a recent amendment to Illinois’s Prejudgment Interest Statute, 735 ILCS 5/2-1303, which took effect on July 1, 2021. Now, pre-judgment interest on bodily injury claims begins to accrue at the rate of 6% annually “on all damages, except punitive damages, sanctions, statutory attorney’s fees, and statutory costs” on the date the lawsuit is filed. Significantly, only private businesses are on the hook for pre-judgment interest, as governmental entities have been expressly excluded.
Business owners should be concerned about this new law. While not all bodily injury claims have merit, of course, the statutory amendment puts business owners in a precarious position. If a business seeks to contest a bodily injury claim that it believes is meritless, it has a proverbial “Sword of Damocles” hanging over its head because pre-judgment interest is now recoverable in addition to all other damages. The amount of interest can be significant, since bodily injury claims can take years to reach trial. In essence, the amendment can be viewed as taxing a business that is merely exercising its right to contest a claim.
Thus, it is expected that the recoverability of pre-judgment interest in bodily injury claims may force more businesses to consider settling claims that they otherwise would have taken to trial before a jury. Additionally, businesses should confirm that their insurance policies extend coverage to awards of pre-judgment interest under the new statute.
If you have questions regarding the impact of these claims on your business, or whether your business has the appropriate insurance coverage in place, please contact Roenan Patt at firstname.lastname@example.org or (312) 368-0100.