Case Explained: NAUTILUS INSURANCE COMPANY v. BEE QUALITY INC

Court: United States Court of Appeals for the Seventh Circuit

Filed: 2026-07-09

The Seventh Circuit affirmed the district court’s grant of judgment on the pleadings in favor of Nautilus Insurance Company, holding that a “Prior Work Exclusion” in Bee Quality Inc.’s commercial general liability policy effectively barred coverage for claims arising from work completed before the policy’s inception date. The court applied Illinois law, which mandates that clear and unambiguous insurance policy terms be enforced according to their plain meaning unless they render coverage illusory. While acknowledging that exclusions are generally construed liberally in favor of the insured, the court determined that the exclusion did not swallow the entire policy because the contract still provided “plenty of room” for completed-operations coverage regarding work performed after February 8, 2022. Consequently, the court rejected Bee Quality’s argument that the premium paid or the potential limitation of coverage rendered the policy illusory, noting that courts cannot rewrite unambiguous agreements to make them more equitable. The practical consequence is that Nautilus owes no duty to defend or indemnify Bee Quality for the underlying state court negligence lawsuit regarding the fatal building collapse, as the claims stem from repairs completed in December 2020, which falls outside the scope of coverage under the policy’s specific exclusion.

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