3.2 Illinois General Liability Insurance

Fault Allocation and the 25% Joint-and-Several Rule

Illinois general-liability claims share the auto rule: modified comparative negligence with a 50% bar (735 ILCS 5/2-1116). A plaintiff more than 50% at fault recovers nothing; otherwise recovery is reduced by the plaintiff's own percentage.

When multiple defendants share fault, 735 ILCS 5/2-1117 controls how much each must pay:

The statute compares each defendant's fault to the total fault of the plaintiff, all defendants sued, and any third-party defendants — not just to the named defendants. A critical carve-out: all liable defendants are jointly and severally liable for the plaintiff's past and future medical expenses, regardless of their fault percentage.

Trap: The 25% line applies to economic and non-economic damages other than medical. For medical bills, even a 5%-at-fault defendant can be on the hook for the whole amount. The Illinois exam frequently pairs the "50% bar" with the "25% joint-and-several threshold" to see if you mix them up.

Worked example

A plaintiff with $200,000 in non-medical damages is 0% at fault. Defendant X is 80% at fault; Defendant Y is 20%.

• X (≥25%) is jointly and severally liable — if Y is insolvent, the plaintiff may collect the full $200,000 from X.
• Y (<25%) is severally liable only and owes at most its $40,000 share.

Commercial General Liability (CGL)

A Commercial General Liability (CGL) policy covers a business's liability for bodily injury, property damage, and personal and advertising injury to third parties. Two trigger forms are tested:

• Occurrence form — responds to injury or damage that occurs during the policy period, no matter when the claim is filed. This is the default for most CGL.
• Claims-made form — responds only to claims first made during the policy period (after a retroactive date), and often needs an Extended Reporting Period (ERP / "tail") at expiration.

Illinois CGL forms are filed with the Department of Insurance (DOI) under file-and-use rating: the insurer files rates and may use them immediately, subject to later review for adequacy and unfair discrimination. Defense costs are typically paid in addition to the limit, and the insurer owes a duty to defend broader than the duty to indemnify.

Pollution and Environmental Liability

Standard CGL contains an absolute pollution exclusion, so environmental exposure is covered through separate Environmental Impairment Liability (EIL) or pollution legal liability policies. Illinois adds:

• Illinois Environmental Protection Act enforcement by the Illinois EPA.
• Underground Storage Tank (UST) registration and cleanup obligations.
• Strict liability for releases of hazardous substances, plus site-remediation cost recovery.

Punitive Damages and Products Liability

Punitive (exemplary) damages punish willful or reckless conduct. Illinois public policy generally makes a defendant's own (direct) punitive damages uninsurable — letting insurance pay them would defeat the deterrent purpose. Vicarious punitive damages (imposed on an employer for an employee's act) may be insurable on a case-by-case basis.

Products liability coverage falls under the CGL's products-completed operations hazard with its own aggregate. Illinois imposes strict liability for manufacturing defects and recognizes design-defect and failure-to-warn claims, subject to a statute of repose that bars most product claims a set number of years after the product's first sale (commonly described as 12 years from delivery to the initial user, with exceptions).

Professional Liability (Errors and Omissions)

Professional liability, also called errors and omissions (E&O) or, for medical providers, malpractice, covers losses caused by a professional's negligent acts, errors, or omissions in rendering services. Unlike CGL (which excludes professional services), E&O responds to economic harm from bad advice or service, not just bodily injury.

Most E&O is written on a claims-made basis, so the retroactive date and tail (Extended Reporting Period) are exam-critical: a claim arising from old work but reported after the policy lapses is covered only if the insured bought a tail.

Umbrella and Excess Liability

Businesses and individuals buy umbrella liability to sit above the limits of underlying CGL, auto, and (for personal lines) homeowners policies. Key tested distinctions:

• An umbrella both increases limits and can drop down to cover some claims excluded by underlying policies (subject to a self-insured retention, or SIR).
• A pure excess policy only raises limits and follows the underlying form exactly.
• The umbrella requires the insured to maintain stated underlying limits; if those lapse, the insured effectively self-insures that layer.

Umbrella does not cover intentional acts, an insured's own punitive damages (per the Illinois public-policy rule above), or workers' compensation obligations.