No Consent is Required by the Insurer When an Insured Validly Assigns its Rights After a Loss
Illinois Tool Works bought the assets and stock relating to manufacturing company Binks’ electrostatic coating application equipment and related products business. Bruno Enssle owned a building and property, which it leased to Binks for its company. The lease was later assigned to Illinois Tool Works. Enssle filed suit against Illinois Tool Works for environmental contamination. Commerce and Industry Insurance Company and United States Fire Insurance Company (collectively “Defendants”) had each issued liability insurance to Binks. They refused to defend Illinois Tool Works in the Enssle action, and Illinois Tool Works filed a declaratory judgment action seeking Defendants owed it a duty to defend because it was an insured under the policy as a successor to Binks and assignee of the benefits. The Trial Court ruled that Defendants owed no duty to defend, and Illinois Tool Works appealed.
First, the Court held that the purchase agreement assigned Binks’ rights to insurance defense and indemnity coverage to Illinois Tool Works for accidents or occurrences that happened prior to the date of sale. The Court reasoned that the language of the contract clearly showed Binks’ intent and sufficiently identified the asset Illinois Tool Works purchased. The Court next found that because the assignment occurred after the loss, no consent by the insurance company was required. The Court reasoned that if the assignment takes place after the loss, what is being assigned is the policy proceeds, which does not require the insurer’s consent. The Court held that the “loss” was not the suit, but Binks’ contamination of the property, which occurred before the assignment. The Court reversed the lower Court’s decision, holding that Defendants did have a duty to defend based on the valid assignment.
Illinois Tool Works, Inc. v. Commerce and Industry Insurance Co., 2011 IL App (1st) 093084, 962 N.E.2d 1042 Ill. App. 1 Dist.,2011
