The insurer argued it had no duty to defend the assignee of a policy because it was not a named insured. While the trial court agreed, the Appellate Court of Illinois reversed. Illinois Tool Works, Inc. v. Commerce and Indus. Ins. Co., 2011 Ill. App. LEXIS 881 (Ill. Ct. App. Aug. 16, 2011).

   The Enssles owned property in Boulder, Colorado, which was leased to Binks Manufacturing Company in 1959. Binks manufactured electrostatic coating application equipment and related industrial products. In 1998, plaintiff Illinois Tool Works purchased Binks' operations. After Binks dissolved, plaintiff continued to lease and use the Enssles' property until 2003.

   In 2003, the Enssles sued plaintiff, alleging that Binks' and plaintiff's business activities caused soil and water contamination. The Enssles contended that plaintiff was assigned the lease and thereby assumed all the obligations under the lease. The lease required that tenants indemnify the Enssles and hold them harmless from any liabilities arising from the tenants' conduct.

   The Binks' liability insurers refused to defend plaintiff in the Enssles' lawsuit. Under the purchase agreement, the Binks had assigned to plaintiffs all rights under its liability policies. Plaintiff also argued it was a successor to Binks, entitling it to coverage. On cross-motions for judgment on the pleadings, the court found the insurers had no duty to defend plaintiff.

   The appellate court reversed. First, nothing in the pleadings demonstrated that plaintiff sought anything beyond the scope of the Binks' rights under the policies, i.e. anything more than a defense for occurrences during the policy periods. Therefore, the insurers' scope of coverage was not increased by the assignment.

   The insurers, however, argued they never consented to the assignment of the policies. The court first noted that the insurers had failed to indicate where in the record the assignment provisions were located. The court, therefore, refused to consider the insurers' argument that plaintiff failed to comply with the policy's consent provision.

   Moreover, notwithstanding the existence of an anti-assignment or consent provision, a policy could be assigned after a loss without notice to or consent of the insurer. An assignment after loss was not the assignment of the policy but the assignment of a claim or debt – a chose in action. Here, the chose in action came into existence when the contamination of the property occurred, i.e., when the loss for which Binks had arguably bought coverage came about. Once the injury or loss occurred, the chose in acton was established and assignable without the consent of the insurer.

   Consequently, the insurers had a duty to defend plaintiff.