The United States Court of Appeals for the Seventh Circuit ruled that an insured is entitled to coverage even though recovery is barred by statute.
In TKK USA, Inc. v. Safety Nat. Cas. Corp., 727 F.3d. 782 (7th Cir. 2013) an insurance carrier denied coverage for a claim that the employer was negligent when the employee contracted Mesothelioma as a result of workplace exposure to asbestos. The defendant insurance carrier denied coverage on the ground, among others, that the claim was subject to a solid defense under Illinois Workers’ Compensation statute barring such a suit. The District Court granted summary judgment to the employer which was reviewed de novo by the Court of Appeals.
The Court of Appeals recognized that the employer had a solid affirmative defense because the claim was barred by statute. However the Court held that the employer did not have to assert that defense and until it was raised the employer was still subject to common law tort liability. The Court said that it found nothing in the policy that provided its “Employers’ Liability Laws” provision was limited to statutes to the exclusion of common law. Since the employer did not raise the affirmative defense, there was coverage for the common law claim made against the employer.