USA – ILLINOIS Trends and Developments Contributed by: Everett J. Cygal, Daniel J. Schufreider, Jasmine K. Dela Luna, Sarah M. Oligmueller and Christopher L. Gerardi, ArentFox Schiff LLP
Inc. v Nat’l Union Fire Ins. Co. of Pittsburgh, PA , 2026 IL 131710, ¶ 23). Country Mutual followed Imperial Marbl e and held the exclusion inapplicable to permitted emissions ( Country Mut. Ins. Co. v Bible Pork, Inc. , 2015 IL App (5th) 140211, ¶ 43, 42 N.E.3d 958, 970, overruled by Griffith Foods Int’l, Inc. v Nat’l Union Fire Ins. Co. of Pittsburgh, PA , 2026 IL 131710, ¶ 43). By contrast, in Scottsdale Indem. Co. v Vill. of Crestwood , 673 F.3d 715, 721 (7th Cir. 2012), the Seventh Circuit applied the exclusion despite regulatory compliance, explain- ing that the suits alleged injuries caused by the con- taminant, which triggered the exclusion. Against this background, the Illinois Supreme Court applied the policy’s plain language to effectuate the parties’ intent and held the following: • the EtO emissions are “traditional environmental pollution” ( Koloms ) or “pollution harms as ordinar- ily understood” ( Scottsdale ) that squarely fit within the policy’s pollution exclusion, which bars cover- age for litigation involving “discharge... into... the atmosphere”; and • the IEPA permit of the EtO emissions changes nothing about this analysis (2026 IL 131710, ¶ 25). The court emphasised that the pollution exclusion said nothing about permitted or authorised pollution and cautioned that courts “must not inject terms and conditions different from those agreed upon by the parties”. It further reasoned that the permit did not change the character or substance of the EtO emis- sions as pollution. Declining to apply the exclusion because the pollution was permitted, the court noted, would undermine the exclusion’s purpose – containing costly environmental litigation, while separate pollu- tion liability policies are available to cover environ- mental lawsuits. In sum, whether the emissions were permitted is irrel- evant to the exclusion’s applicability. Impact of the Supreme Court’s decision The Illinois Supreme Court’s decision has far-reach- ing implications. Insurance companies now have firm footing to avoid millions in defence costs (and subse-
quent potential indemnity) for liability stemming from government-permitted emissions. And those insur- ance companies will no longer have to plan to pro- spectively exclude government-permitted pollution from their policies altogether. Meanwhile, commercial policyholders who expected coverage for such emis- sions will have to look elsewhere for environmental litigation coverage, even if they abide by the pollution limitations set by their state permit. Environmental liti- gation will likely increase in the months ahead, as par- ties examine Griffith Foods for guidance or distinction. Other Notable 2025 Decisions Impacting Illinois Insurance Law Chicago Rest. Mgmt. Grp., LLC v Great Am. Ins. Co., 2025 IL App (1st) 232353, 264 N.E.3d 528, 543, appeal denied, No 131664, 2025 WL 2720428 (Ill. Sept. 24, 2025) Owners of Chicago Cut Steakhouse and restaurant developer Chicago Group (“Plaintiffs”) sought insur- ance coverage from Great American Insurance Com- pany (“Great American”) for costs associated with a 2019 arbitration demand made against Plaintiffs. This 2019 arbitration demand came on the heels of a 2018 lawsuit in which Chicago Cut investors sought corpo- rate records. Great American denied Plaintiffs’ request on the basis that the arbitration demand’s tort and breach of contract claim constituted “Related Wrong- ful Acts” under the insurance policy’s terms. The cir- cuit court found, and the appellate court affirmed, that the 2018 suit and 2019 arbitration demand did not involve “Related Wrongful Acts” that had to be reported to Great American during the policy period in effect at the time of the 2018 initial suit, as there was no underlying “common nexus” or “causal connec- tion” between the two events. Rahimzadeh v Ace American Ins. Co., 142 F.4th 972 (7th Cir. 2025) In Rahimzadeh v Ace American Ins. Co. , the Seventh Circuit held that an occupancy requirement in a cor- porate automobile insurance policy to trigger under- insured motorist (UIM) coverage did not violate Illi- nois public policy. Ace American Insurance Company (“Ace”) denied Mr Rahimzadeh’s UIM claim submit- ted under his employer’s corporate automobile policy because Mr Rahimzadeh was riding a bicycle when hit by a vehicle and was not in a covered automobile.
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