United States Fidelity & Guaranty Co. v. Wilkin Insulation Co.

Asbestos was a popular insulation material until scientists learned that as asbestos decays, it releases toxic airborne fibers. Government regulators began ordering building landlords to take expensive asbestos-abatement measures. To cover the costs of complying with these mandates, the landlords sued Wilkin Insulation Company (Wilkin) (defendant) and other companies that once had installed asbestos. Wilkin’s insurer, United States Fidelity & Guaranty Company (Fidelity) (plaintiff), sought a declaratory judgment that Wilkin’s commercial general liability (CGL) insurance policy did not obligate Fidelity to defend or indemnify Wilkin against the landlords’ claims. The policy covered claims for property damage, defined as physical injury to or destruction of tangible property arising from an occurrence, defined as including an unexpected, unintended accident that continuously exposes property to conditions that result in property damage. Fidelity argued that the presence of asbestos could cause a property to lose market value but that this did not constitute property damage. Fidelity also argued that any occurrence in question was not an accident but resulted from Wilkin’s intentional installation of asbestos. The trial court entered judgment for Fidelity but was reversed on appeal. Fidelity appealed to the Illinois Supreme Court.