Insurance Policies Containing “Other Insurance” Clauses
David Speltz and Timothy Weis (individual defendants) and Huron Consulting Group, Huron Consulting Services, and Wellspring Management Services (Huron defendants) were before the court on cross motions for summary judgment.
Executive Risk Indemnity (Executive) had already filed an interpleader action in which equitable relief was granted. Executive deposited the amount of the insurance policy ($2 million) with the court clerk.
The outstanding issue was how the insurance proceeds would be divided amongst the individual defendants and the Huron defendants. Both parties have claims to the proceeds of the policy. The parties are insured under Liberty Surplus Corporation (Liberty). The policy contains another insurance provision which states that it shall be in excess over any other valid and collectible insurance policy. The individual defendants were insured by National Union Fire Insurance (National), which contains another insurance provision providing only excess coverage when another policy covers the same occurrence.
First, the court determined whether the National policy provided the individual defendants with excess coverage or if it is the primary policy. The general rule is that if two insurance policies contain excess coverage provisions, both insurers will split the costs on a pro rata basis. Both excess coverage provisions, in theory, cancel each other out rendering both insurers primary insurers. However, an exception to the rule applies when a policy specifically states another insurance provider as the primary coverage. Liberty’s policy specifically stated that Executive was the primary coverage provider and listed Executive’s policy number in their other insurance provision. Because Liberty fell within this exception, the court found Liberty to be the excess provider.
