(Article from Insurance Law Alert, May 2019)
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An Illinois appellate court ruled that bodily injury claims arising out of asbestos exposure arose out of multiple occurrences based on location and nature of exposure, rather than a single occurrence based on the manufacture of an allegedly defective product. Continental Casualty Co. v. Hennessy Indus., Inc., 2019 WL 1803101 (Ill. Ct. App. Apr. 23, 2019).
Ammco, a brake equipment manufacturer, was sued in numerous personal injury asbestos suits. Ammco’s insurers sought a declaration as to several coverage issues, including the number of occurrences for purposes of determining the limits of liability under the policies. An Illinois trial court ruled in the insurers’ favor, finding that the continuous manufacture of allegedly defective products constituted a single occurrence. The appellate court reversed.
The appellate court ruled that the underlying asbestos claims should be grouped by location such that each location constitutes a separate occurrence. The court relied on “premises language” in the policies’ definition of “occurrence,” which states that “all such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence.”
The court declined to apply a “cause test” for determining the number of occurrences, explaining that the cause-based analysis is appropriate only when the terms of the policy do not otherwise clarify the number-of-occurrences issue. Such an analysis was not appropriate, the court reasoned, because “the premises language clearly requires the bundling of claims that arise from substantially the same conditions at the same location.”