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Erie Insurance Exchange v. Imperial Marble Corp.

ELR Citation: 41 ELR 20304
Nos. 3-10-0380, (Ill. App. Ct., 09/15/2011)

An Illinois appellate court held that an insurer has a duty to defend a manufacturing company in an underlying lawsuit filed against it by nearby homeowners for personal injury and property damage stemming from emissions generated as part of the company's normal business operations. The insurer argued that because the emissions were intentionally discharged, they do not constitute an accident under the policy. But the alleged bodily injury and property damage were unexpected results of the company's intended emissions. They therefore constitute an accident under the policy. Similarly, the policy's expected or intended injury exclusion does not apply to preclude coverage because the company operated its plant pursuant to an emissions permit. It therefore cannot be considered to have expected or intended to injure the homeowners' persons or properties. In addition, the policy's pollution exclusion is ambiguous as to whether the emission of hazardous materials in levels authorized under a permit constitute traditional environmental pollution excluded under the policy. Because ambiguities in the complaint and policy must be resolved in favor of the insured, the insurer's duty to defend is implicated. The court, therefore, reversed a lower court decision that coverage was precluded under the policy.