An Illinois roofer lost its fight for insurance coverage after two people died in a facade collapse - because the work predated the policy.
On July 9, 2026, the Seventh Circuit Court of Appeals affirmed that Nautilus Insurance Company owed Bee Quality Inc., a roofing contractor, neither a defense nor indemnity after two people died in a building collapse. The reason was one endorsement doing exactly what it was written to do.
Here is how it unfolded. A windstorm damaged a Chicago structure on August 2, 2020, and Bee Quality repaired it. On April 12, 2022, a facade collapsed on two men, resulting in their deaths. Their estates sued Bee Quality in Illinois state court, alleging it "had negligently performed repairs on the structure."
Bee Quality tendered the claim to Nautilus. Its commercial general liability policy ran from February 8, 2022, to February 8, 2023, and covered "completed operations." But a Prior Work Exclusion cut off coverage for damage "arising out of" any work finished before the policy's start date, and said Nautilus had "no duty to defend" such claims. The catch: Bee Quality admitted its repairs were done by December 2020. That admission handed the insurer the case.
The policyholder's counterpunch is the part worth watching. Bee Quality argued the coverage was "illusory" - that it had paid for completed-operations protection it could never use, including for "all of Bee Quality's past ten years of operations." It is the argument insureds reach for whenever an exclusion bites hard.
It failed. Illinois appellate courts have held an exclusion is illusory only when it has the effect of "swallowing" coverage "entirely." Because the policy still covered post-inception work, it left "plenty of room for coverage of the main insured hazards." Partial coverage, the court said, is not the same as none.
The court also declined to open discovery into how Nautilus priced the policy. Whether coverage is illusory is a question of law, it held - decided on the pleadings, no underwriting files required.
For insurers, the takeaways are practical. A tightly drafted temporal exclusion can defeat both defense and indemnity, even when the loss is catastrophic. An insured's own admission on timing can end the fight fast. And in Illinois, the illusory-coverage argument is a narrow one - as long as the policy delivers real coverage somewhere, an exclusion trimming the edges will stand.
