On Monday, May 7, 2012, insurers Continental Casualty Co. and Columbia Casualty Co filed suit against their insured, car parts manufacturer, Hennessy Industries Inc, in Illinois Court. The lawsuit seeks to limit Continental and Columbia’s liability in asbestos-related injury claims against Hennessy, for coverage sought by Hennessy for lawsuits arising from asbestos exposure through the use of products manufactured, distributed or sold by its predecessor, Ammco Tools Inc.
Continental and Columbia, by way of declaratory judgment, are seeking a ruling that they have no obligation to indemnify Hennessy for underlying actions, in which all primary coverage has not been exhausted. In opposition, Hennessy holds that the underlying primary insurance policies have in fact been exhausted through payment of claims; a fact that is disputed by Continental and Columbia. In addition, the plaintiffs are also seeking judgment admonishing them from any obligation to indemnify Hennessey for injury occurring outside their policy periods and that all underlying actions are defined as a singular occurrence per each policy period.
This case demonstrates the necessity for avoiding uncertainty, cost and risk down the road by ensuring clear distribution and sales agreements are always in place. A proactive approach by the manufacturer, with clear delineations of duties and responsibilities in place, would have avoided this issue.
This case is currently pending in the Circuit Court of Cook County, Illinois, Chancery Division; Continental Casualty Co. and Columbia Casualty Co. v. Hennessy Industries.
For more information, please contact any member of the Global Insurance Services Practice Group.