Insurer Must Provide Defense for All Cases where Bare Underlying Allegations would Render Insured Individually Liable
In Illinois Tool Works Inc. v. Travelers Casualty & Surety Co., Illinois Tool Works Inc. and ITW Finishing LLC (collectively, “Illinois Tool”) are companies engaged in the manufacture and distribution of tools, equipment, finishing systems, and consumables. Travelers Casualty & Surety Company and Central Indemnity Company (collectively, “Insurers”) are companies in the insurance business that issued policies to Illinois Tool as early as 1971, but no later than 1987. The dispute concerns ten policies the Insurers issued to Illinois Tool for certain periods between 1971 and 1987. The policies contained different language, but each covered Illinois Tool for claims resulting from bodily injury. All policies also contained a provision that required the Insurers to defend Illinois Tool in any suit brought against it for bodily injury, even if the allegations of the suit are false or groundless. The parties did not dispute whether the injuries alleged in the underlying welding cases were the type covered by the policy. Instead, the Insurers argued that they cannot be liable because the last policy they issued expired in 1987, and Illinois Tool did not enter the welding product market until 1993. Illinois Tool filed an action seeking a declaration that the Insurers owed it a duty to defend the underlying suits. The Insurers filed counterclaims. The parties proceeded to file cross-motions for summary judgment on the duty to defend issue. The trial court subsequently found in favor of Illinois Tool.
On appeal, the Insurers argued that they had no duty to defend because there were no allegations made in the underlying complaints that Illinois Tool caused injuries to any underlying plaintiff during the periods covered by their policies.
The court reviewed whether the facts pled by the underlying plaintiffs in the welding cases would potentially bring the claims within the Insurers’ coverage. The court held that Illinois Tool should not be named as a defendant in the underlying welding cases and that Insurers still had a duty to defend even when the allegations against Illinois Tool were groundless.
Illinois Insurance Law: An insurer must provide a defense for all cases where the bare underlying allegations would render their insured individually liable. In direct liability cases, the Insurers have a duty to defend and that duty remains until the factual ambiguities in the underlying complaints are resolved in favor of the insurer.
Illinois Tool Works Inc. v. Travelers Casualty & Surety Co., 2015 IL App (1st) 132350.
