An Illinois appellate court recently held that three insurers have a duty to defend Illinois Tool Works Inc., and a subsidiary, against multiple suits alleging exposure to asbestos, benzene and other chemicals through welding products, clarifying duty-to-defend standards under state law and giving policyholders an edge in seeking coverage for suits containing vague and ambiguous allegations.
“The court didn’t address to what extent a court can or should look at extrinsic evidence in determining the duty to defend,” said Jonathan L. Schwartz, a partner in Goldberg Segalla’s Global Insurance Services Practice Group. “This is especially significant where the underlying complaint is silent or ambiguous with respect to a particular fact. In this category of complaints, there was a failure to allege when the exposure occurred or the injury occurred. However, because the underlying complaints left open the possibility that they occurred during the insurers’ policy periods, the court construed that fact in favor of coverage.”
Jonathan noted his surprise that the appellate court didn’t refer to extrinsic evidence to resolve the ambiguities found in some of the underlying complaints, pointing to a host of cases in which Illinois courts have departed from the strict “four corners” approach to assessing an insurer’s duty to defend.
“Again, a fact like this can be dispositive of the coverage issues even though, in the underlying case, it’s not necessarily at the heart of the matter,” Jonathan said. “This case shows that, when evaluating coverage, insurers and their counsel should be cognizant of the dutytodefend rules in a certain jurisdiction. That especially includes when insurers can rely on extrinsic evidence in assessing whether the underlying complaint triggers their duty to defend.”