Many companies acquire other businesses to grow or expand their product lines. In some cases, those acquisitions also come with environmental hazards and potential lawsuits. Does an insurance company have a duty to defend a former insured in cases claiming that individuals were injured by exposure to toxic substances even though the exposure may have occurred before the insured owned the company? According to a recent case decided by the Appellate Court of Illinois, the answer is yes. [Ill. Tool Works Inc. v. Travelers Cas. & Sur. Co., 2015 IL App (1st) 132350 (Ill. App. Ct. 1st Dist. 2015)]
Illinois Tool, which manufactures and distributes tools, equipment and finishing systems, was insured by Travelers Casualty & Surety Company and Century Indemnity Company from 1971 through 1987. In 1993, as part of its expansion plans, Illinois Tool purchased a company that made welding products.
Several individuals filed multiple toxic tort cases claiming that they were injured as a result of exposure to asbestos, benzene, manganese and other harmful materials. Illinois Tool was named individually, as a successor-in-interest to the welding company it acquired, or as both, depending on the suit. The company turned to its former insurance carriers to defend the suits, but the insurers declined, claiming that the policies had expired.
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Rosalie Donlon
Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU PropertyCasualty360.com. You can contact her at [email protected].
