On December 5, 2017, the Illinois Appellate Court affirmed a trial court ruling in the case of United Conveyor Corp. v. Allstate Insurance Co., 2017 IL App (1st) 162314, that a conveyor belt maker’s use of asbestos parts in its products amounted to a single occurrence for purposes of its coverage with Travelers Indemnity Company.
United, which faced thousands of asbestos-related lawsuits filed across the United States since 1983, designed and sold each conveyor system according to its customer’s specifications and supplied various parts used to assemble the systems. From the 1930s to early 1984, United sold asbestos-containing parts (used as components in the conveyor system’s assembly) manufactured by a third party, raw chysotile asbestos supplied by third parties, and cement utilized by its customers to form asbestos cement. Travelers had issued 22 policies to United from December 3, 1952, to December 31, 1974, which consistently defined “occurrence” as “an accident, including continuous or repeated exposure to conditions, which resulted in bodily injury.”
United argued that its asbestos claims should have been characterized as multiple occurrences because the asbestos exposure resulted from the separate installation and maintenance of the custom-designed conveyor systems. Travelers argued that the underlying asbestos claims arose from a single occurrence because they were based on United’s continuous manufacture and sale of conveyor systems containing asbestos components.
The Illinois Appellate Court found that the fact that each system was designed to the customer’s specifications (thus the systems were not mass produced) was true, “but beside the point. The single, unitary cause of claims against United is the fact that it incorporated asbestos-containing components or products into each of its systems designed for high-heat operations. Contrary to United’s position, the cause of its loss was not attributable to the installation and maintenance by United’s customers of each conveyor system that contained asbestos products…. Specially, the installation and maintenance by United’s customers did not give rise to United’s liability; its manufacturing and activities did.” Based on the Illinois landmark case of United Gypsum Co. v. Admiral Ins. Co., 268 Ill. App. 3d 598 (1994), the Court ruled that the claims against United related to a single occurrence and, as a consequence, the per-occurrence limit applied.