An Illinois appeals court backed an insurer's refusal to pay a flood claim, ruling that a vacancy exclusion applied to a shuttered brewery.
The First District Appellate Court affirmed summary judgment for West Bend Mutual Insurance Company (West Bend) on July 28, 2026, ending a fight over nearly $300,000 in water damage.
Argus Investment, Inc. (Argus) owned a Chicago property where it once ran a commercial brewery. The brewery closed on March 27, 2020, during the pandemic and never reopened. Everyone but an office manager was let go.
Argus's commercial general liability policy with West Bend carried a vacancy provision. It said that if a building "has been vacant for more than 60 consecutive days" before a loss, the insurer "will not pay for any loss or damage" from certain causes, "even if they are Covered Causes of Loss" - including "[w]ater damage." A building did not count as vacant unless at least 31% of its floor space was used for "customary operations."
On January 14, 2022, flooding hit the property. Argus filed a claim for $135,735.41 in building damage and $160,897.68 for inventory and equipment. West Bend denied it a week later, on January 21, 2022, pointing to the vacancy exclusion.
Argus sued for breach of contract and for what it called a "vexatious and unreasonable" denial under the Illinois Insurance Code. It argued West Bend had given up the exclusion, or was blocked from using it, because the insurer knew or should have known the building sat empty before the policy automatically renewed in June 2021.
The court did not agree. The emails Argus relied on dealt with its workers' compensation policy, not the liability policy, and described the brewery winding down rather than the building going vacant. Closing a business, the court said, does not by itself make a property vacant.
Argus's chief executive admitted he never read the policy and did not learn of the exclusion until the claim was denied. The court reasoned that Argus could not have been misled into believing a vacant building was covered when it did not know the exclusion existed in the first place.
For insurers and claims teams, the decision reinforced familiar principles. An automatic renewal and a separate workers' compensation audit did not, on their own, add up to a waiver. The court stressed that the burden sits with the policyholder to know what its own policy says - and that an insurer has no duty to police the adequacy of a customer's coverage.
