[Citations.] If the insurance company is fully advised of the facts bearing on its policy defense and does not then insist on noncoverage but recognizes the continued validity of the policy * * *, an intention to waive the policy defense would follow." Kenilworth Insurance Co. v. McDougal (1974), 20 Ill. App.3d 615, 620, 313 N.E.2d 673, 677. An insurer who wishes to reserve his or her rights under a policy must notify the insured "without delay" or "with reasonable promptness."
"If the insurance company is fully advised of the facts bearing on its policy defense and does not then insist on noncoverage but recognizes the continued validity of the policy by requiring the insured to go to the trouble and expense, if any, of preparing proofs of loss and related matter, an intention to waive the policy defense would follow." Kenilworth Insurance Co. v. McDougal, 20 Ill. App. 3d 615, 620, 313 N.E.2d 673, 677 (1974), cited with approval in Vasilakis v. Safeway Insurance Co., 46 Ill. App. 3d 369, 374, 361 N.E.2d 1, 3 (1977). Strong proof is not required to show a waiver of a policy defense.
[102] at 10. In support, Extra Logistics cites Kenilworth Ins. Co. v. McDougal, 20 Ill.App.3d 615, 620 (2nd Dist. 1974) and McMahon v. Coronet Ins. Co., 6 Ill.App.3d 704, 708 (1st Dist. 1972). [102] at 10; [111] at 6-7. It cites the former for the proposition that "[i]f the insurance company is fully advised of the facts bearing on its policy defense and does not then insist on noncoverage but recognizes the continued validity of the policy by requiring the insured to go to the trouble and expense, if any, of preparing proofs of loss and related matter, an intention to waive the policy defense would follow."
Because plaintiff does not challenge defendant's assertion that it is a governmental body covered under section 2-103(a), we focus upon the transactional portion of section 2-103(a). "`Transaction' has been defined to include every fact which is an integral part of a cause of action." Kenilworth Insurance Co. v. McDougal, 20 Ill. App. 3d 615, 617, 313 N.E.2d 673, 675 (1974). The term "transaction" should not be so narrowly interpreted to include only those immediate facts out of which the cause of action arose.
( Dickman v. Country Mutual Insurance Co. (1983), 120 Ill. App.3d 470, 472, 458 N.E.2d 199.) Extended delay in informing the insured of its intention to deny liability because of the insured's breach of policy provisions, after the carrier learns of the breach, Old World maintains, constitutes a clear waiver of the breach. (See Krutsinger v. Illinois, 10 Ill.2d 518, 141 N.E.2d 16; Kenilworth Insurance Co. v. McDougal (1974), 20 Ill. App.3d 615, 313 N.E.2d 673.) Waiver arises from an affirmative act, is consensual, and consists of the intentional relinquishment of a known right. ( Crum Forester Corp. v. Resolution Trust Corp. (1993), 156 Ill.2d 384, 396, 620 N.E.2d 1073; Western Casualty Surety Co. v. Brochu (1985), 105 Ill.2d 486, 499, 475 N.E.2d 872.) A waiver may be express or implied, arising from acts, words, conduct or knowledge of the insurer. ( Crum Forester Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 620 N.E.2d 1073; Western Casualty Surety Co. v. Brochu, 105 Ill.2d 486, 475 N.E.2d 872.)
• 2 Yet, an insurer may waive a policy defense by continuing under a policy when it knows or in the exercise of ordinary diligence could have known the facts in question giving rise to the defense. ( Kenilworth Insurance Co. v. McDougal (1974), 20 Ill. App.3d 615, 620, 313 N.E.2d 673, 677.) A waiver consists of a voluntary, intentional relinquishment by the insurer of a known right and may be express or implied, arising from the acts, words, conduct, or knowledge of the insurer.
One may be estopped to assert rights otherwise accruing where one's voluntary conduct has been such as to have caused another party, against whom those rights are sought to be asserted, to have relied upon such conduct and to have altered his position for the worse. ( Anderson v. Safeway Insurance Co. (1973), 10 Ill. App.3d 597, 295 N.E.2d 117.) Strong proof is not required to show a waiver of a policy defense, but only such facts as would make it unjust, inequitable or unconscionable to allow the defense to be interposed. ( Kenilworth Insurance Co. v. McDougal (1974), 20 Ill. App.3d 615, 313 N.E.2d 673.) In Kenilworth, the considerations involved in determining the issue of estoppel were set forth:
LaMonica's other cited authorities are distinguishable. In Kenilworth Insurance Co. v. McDougal, 313 N.E.2d 673 (Ill.App.Ct. 1974), the insurer denied coverage for an automobile collision because there was no physical contact, but it had the information needed to make that determination for over eight months before informing the insured. 313 N.E.2d at 676.
If an insurer assumes the defense of an insured without a reservation of rights and the insurer knows or should have known facts supporting a policy defense to coverage, the insurer may waive that defense to policy coverage. American States, 631 N.E.2d at 1297 (citing Kenilworth Ins. Co. v. McDougal, 313 N.E.2d 673, 677 (Ill. App. Ct. 1974)). Generally, "[a]n insurer who wishes to reserve his or her rights under a policy must notify the insured 'without delay' or 'with reasonable promptness.'"
It is well established, however, that a waiver will generally not be found when a party " 'is ignorant of the existence of such rights.' " American States Insurance Co. v. National Cycle, Inc., 260 Ill. App. 3d 299, 306 (1994) (quoting Kenilworth Insurance Co. v. McDougal, 20 Ill. App. 3d 615, 620 (1974)). Although "[s]trong proof is not required to show a waiver of a policy defense," there must nevertheless be sufficient facts that would make it "unjust, inequitable or unconscionable to allow the defense to be interposed."