A-Side DIC D&O Policy Is Excess to Primary D&O Policy

A California federal court has held that an A-side difference in condition (DIC) D&O policy is excess to a primary D&O policy under California law, even where the A-side policy does not specifically identify the underlying insurance or a numerical attachment point.  Progressive Cas. Ins. Co. v. St. Paul Fire & Marine Ins. Co., 2014 WL 2212020 (N.D. Cal. May 28, 2014).

The primary D&O carrier sought contribution from an A-side carrier for certain defense and settlement costs.  The A-side carrier maintained that its policy was excess to the primary policy and that it therefore had no contribution obligations.  The court agreed that the A-side policy was excess based on the policy’s insuring clause, which limited coverage to loss not “paid by any other insurance or as indemnification from any source.”  In so holding, the court rejected the primary carrier’s argument that a policy must identify an underlying policy or predetermined amount of primary coverage to qualify as excess.  The court further posited that, even if the A-side policy’s language was ambiguous, extrinsic evidence demonstrated that the insured and the A-side insurer intended the policy to be excess to the primary policy.  Because the two insurers’ policies did not insure the same risk at the same level of coverage, the primary insurer could not seek contribution under California law.