The facts for this article are taken from the following case: American States Insurance Co. v. Koloms 177 Ill.2d 473 (Ill. 1997)
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The Koloms owned a 2-story commercial building. In September 1990, the building’s furnace broke, emitting carbon dioxide that caused several tenants to become sick. The tenants sued for damages. The Koloms were covered by a commercial general liability policy (CGL) that had a total pollution exclusion (TPE). When they submitted their claim, the carrier determined the “total pollution exclusion” (TPE) applied, preventing the insurer from providing coverage. Several lower courts disagreed with the insurer’s analysis of the policy and ruled for the Koloms, forcing the insurer, American State Insurance Company, to appeal to the Illinois Supreme Court.
The case centered around the TPE’s specific language and history. American State argued the language clearly applied to the case’s facts while the insured responded that the TPE historically only applied to larger scale environmental disasters, not to routine commercial hazards. The court researched how other states ruled on the issue and noted there was a split among the jurisdictions. The court ruled for the insureds, arguing that, taken to its logical conclusion, the insurer’s argument would lead to an interpretation so broad that the TPE would apply to literally any discharge.
How a Captive Would Have Helped
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