Insurer Goes 1 for 2 in Coverage Dispute Over Elevator Accident

By Don R. Sampen, published, Chicago Daily Law Bulletin, December 23, 2025

The U.S. District Court for the Northern District of Illinois, applying Illinois law, recently held that an insured could not target tender to an excess insurer, and that another insurer was potentially estopped from denying coverage by not issuing an effective reservation of rights.

The case is TK Elevator Corp. v. Church Mutual Insurance Co., No. 1:23-CV-17173, 2025 U.S. Dist. Lexis 224418 (Nov. 14). One of the insureds, TK Elevator Corp., was represented by Molzahn, Reed & Rouse LLC of Chicago. Vedder Price P.C. of Chicago represented another insured, Triad Senior Living Inc. HeplerBroom LLC of Chicago represented the insurer, Church Mutual Insurance Company.

Triad managed Affordable Community Housing Trust Epsilon Inc., doing business as Waterford Estates. Triad employee Maggie Carroll was injured when an elevator at Waterford fell two floors. After receiving workers’ compensation, she sued TK Elevator, which serviced and maintained the elevator. TK Elevator in turn brought a third-party action against Triad for contribution.

Triad had two insurance policies with Church Mutual, a commercial general liability policy and an umbrella policy. In its service agreement with TK Elevator, Triad agreed to name TK Elevator as an insured under its policies. TK Elevator thus sought coverage under the Church Mutual policies, which Church Mutual denied, in part based on the employee exclusion in the CGL policy.

Church Mutual agreed to defend Triad on the contribution claim, but purported to reserve its rights regarding indemnity based on the same employee exclusion.

TK Elevator and Triad brought the instant lawsuit for coverage against Church Mutual, with TK Elevator seeking coverage under the umbrella policy, and Triad under the CGL policy based on an estoppel theory.

Analysis

On cross-motions for summary judgment, Judge Edmond E. Chang held in favor of Church Mutual on TK Elevator’s claim for coverage, but found fact issues regarding Triad’s estoppel theory.

He first addressed TK Elevator’s arguments. The Church Mutual umbrella policy, unlike its CGL policy, contained no employee exclusion. Church Mutual nonetheless relied on the umbrella policy’s “underlying insurance” and “other insurance” provisions, both of which stated that the umbrella coverage would not apply until after exhaustion of all other insurance, except for insurance purchased “to apply specifically in excess of this policy.”

Church Mutual also pointed to two layers of insurance coverage TK Elevator had of its own with HDI Global Insurance Co. Church Mutual argued the HDI policies must first be exhausted prior to the availability of the Church Mutual umbrella policy.

TK Elevator responded that at least one of the HDI policies should be construed as excess over the Church Mutual umbrella policy based on language in the HDI policy stating that it would apply as excess over any insurance required by contract to be maintained for the benefit of TK Elevator. TK Elevator contended that the Church Mutual umbrella policy had been required by contract.

Chang, however, ultimately held for Church Mutual, finding the HDI policy had not been “purchased to apply specifically” in excess of the Church Mutual umbrella policy. The umbrella policy therefore was not available to TK Elevator until it exhausted the HDI policies.

TK Elevator also argued that it was entitled to make a “target tender” to the Church Mutual umbrella policy. Chang acknowledged the target tender doctrine in Illinois allowed an insured to select one of several insurers that provided coverage to defend and indemnify the insured to the exclusion of other insurers.

He further wrote, however, that the doctrine originated in cases where the insured was covered by two concurrent primary policies, not one primary and one excess. And because the Church Mutual umbrella policy was excess in nature, the doctrine would not apply.

Triad had better success as an insured. It argued that Church Mutual had begun defending it in the underlying contribution litigation without an effective reservation of rights and should therefore be estopped from raising policy defenses, such as the employee exclusion. Triad specifically pointed to a letter in which Church Mutual acknowledged its duty to defend the contribution claim against Triad, and reserved its rights only “as to any duty to indemnify [Triad] for” other third-party claims.

In response, Church Mutual argued it subsequently sent another letter to Triad generally reserving all rights, and even a later letter in which it expressly reserved its rights under the employee exclusion. Triad countered that it never received the latest letter, and that fact issues existed regarding how Church Mutual’s general reservation letter should be construed.

Chang agreed that fact issues existed regarding Church Mutual’s claimed reservation. He also agreed that fact issues arose based on Triad’s claim that it suffered prejudice due to Church Mutual’s control of its defense for over four years. Based on these fact issues, Chang found it necessary to reject summary judgment against Triad.

The court therefore granted Church Mutual’s summary judgment motion as to TK Elevator but denied it summary judgment regarding Triad.

Key Points

“Other insurance” language in an excess policy stating that it is excess over any other policy not “specifically” written as excess over the excess policy will be given priority over other coverage not specifically so written.

The Illinois targeted tender doctrine does not allow an insured to target an excess policy for coverage when all available primary coverage has not been exhausted.

An insurer providing an insured a defense without a clear and effective reservation of rights runs the risk of being estopped from raising policy defenses.