Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Excess insurance/exhaustion

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Excess E&O Policy Not Triggered After Exhaustion Of Primary Policy, Where There Is At Least Potential For Coverage Under Separate D&O Policy

Posted in Cooperation, Excess insurance/exhaustion, Other Insurance
The United States District Court for the District of Kansas, applying Kansas law, has held that an excess E&O policy was not triggered where coverage under a potentially responsive D&O policy had not yet been resolved.  Bedivere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc., 2019 WL 4752051 (D. Kan. Sept. 30,… Continue Reading

Excess Carrier Not Entitled to Compel Production of Insured’s Settlement Agreement with Underlying Carriers

Posted in Cooperation, Excess insurance/exhaustion
Applying Illinois law, a federal district court has held that a cooperation clause in an excess insurer’s policy did not entitle the excess insurer to compel production of the insured’s settlement agreement with a primary carrier.  Homeland Ins. Co. of N.Y. v. Health Care Serv. Corp., 2019 WL 1499300 (N.D. Ill. Apr. 3, 2019).… Continue Reading

Excess Insurer Not Bound by Primary Insurer’s Payment of Uninsurable Disgorgement Settlement

Posted in Excess insurance/exhaustion, Loss
Applying California law, the United States District Court for the Central District of California has held that a follow-form excess insurer was not bound by the primary insurer’s decision to pay a settlement because the settlement constituted uninsurable disgorgement that did not trigger the excess insurer’s policy.  Axis Reinsurance Co. v. Northrop Grumman Corp., No.… Continue Reading

Court Holds that Government-Issued Subpoena Constitutes a Claim

Posted in “Claim”, Excess insurance/exhaustion
The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a government-issued subpoena constituted a Claim under the directors and officers liability policies at issue, thus allowing a company’s coverage action to proceed against its primary and excess insurers.  Astellas US Holding, Inc. v. Starr Indem. & Liab.… Continue Reading

Ninth Circuit Holds Excess Policy Unambiguously Required Exhaustion of Underlying Limits by Insurers Under Either New York or California Law

Posted in Excess insurance/exhaustion
The United States Court of Appeals for the Ninth Circuit has held that a New York choice of law provision in a policy issued by an international insurer is enforceable and that, under either New York or California law, an excess policy was not triggered when the underlying policy limits were not exhausted through payments… Continue Reading

Insurer’s Allegations that Declaratory and Injunctive Relief Are Not Covered Loss Survive Motion to Dismiss

Posted in Excess insurance/exhaustion, Loss, Wrongful Act
The United States District Court for the Northern District of California has denied an insured’s motion to dismiss an umbrella insurer’s declaratory judgment action.  Great American Ins. Co. v. Quintana Homeowners Ass’n., 2017 WL 3453394 (N.D. Cal. Aug. 11, 2017).  The insurer alleged that it had no duty to defend or indemnify after exhaustion of… Continue Reading

Underlying Insurer’s Agreement to Pay Limits Does Not Trigger Exhaustion for Excess Policy Requiring “Actual Payment”

Posted in Excess insurance/exhaustion
An Illinois intermediate appellate court has held that excess insurance policies requiring “actual payment” by an underlying insurer for exhaustion purposes were not triggered where the insurer “pledged” its policy as collateral and agreed to advance defense costs until its policy was exhausted but did not make “actual payment” in legal currency. Ritchie v. Arch… Continue Reading

Excess Insurer’s Unambiguous Consent-to-Settlement Provision Bars Coverage

Posted in Consent to settle/incur defense costs, Excess insurance/exhaustion
The United States Court of Appeals for the Sixth Circuit, applying Michigan law, has held that a policy provision requiring an excess insurer’s written consent before entering into a settlement was not ambiguous and therefore barred coverage under the excess policy.  Stryker v. National Union Fire Ins., 2016 WL 6818853 (6th Cir. Nov. 18, 2016).… Continue Reading

Insurer Has a Duty to Defend Lawsuits Potentially Seeking Damages Not Flowing From a Contractual Obligation

Posted in Defense Costs, Dishonesty Exclusion, Excess insurance/exhaustion, Loss
The California Court of Appeal has held that an errors and omissions insurer had a duty to defend lawsuits seeking amounts owed under contract because the lawsuits potentially sought non-contractual damages for breach of fiduciary duty and non-disclosure.  Health Net, Inc. v. Am. Int’l Spec. Ins. Co., 2016 Cal. App. Lexis 7296 (Cal. Ct. App.… Continue Reading

No Extrinsic Evidence Allowed Where Policy Language is Unambiguous

Posted in Excess insurance/exhaustion, Other: “Reinstatement” Endorsement
The United States District Court for the Northern District of California, applying California law, has held that, where the language of a reinstatement of limits endorsement is unambiguous, extrinsic evidence to show a contrary intent of the parties cannot be introduced to contradict the policy’s plain language. Mayer Hoffman McCann P.C. v. Camico Mutual Ins.… Continue Reading

Insured Cannot “Fill the Gap” Between Primary Insurer’s Settlement Payment and Underlying Limit

Posted in Excess insurance/exhaustion
The United States Court of Appeals for the Fifth Circuit, applying Texas law, has held that an excess insurer had no obligation to make any payments when a policyholder settled its claims against a primary insurer for less than the underlying limit, even if the policyholder paid the difference to “fill the gap” between the… Continue Reading

Policies Do Not Provide Coverage for Claim Stemming from Pre-Continuity Date Subpoena and Acts of Subsidiary Prior to Acquisition by Insured

Posted in “Claim”, Excess insurance/exhaustion, Notice of Claim
A Louisiana intermediate court of appeals has affirmed a district court’s holding that the insurance policies at issue covered only those wrongful acts that occurred after the dates the policies were issued and that a letter from the U.S. Department of Labor stating that it was conducting an investigation and attaching a subpoena constituted a… Continue Reading

Insurer Breaches Duty to Defend by Interpleading Limit

Posted in Defense Costs, Excess insurance/exhaustion
A California federal district court has held that an insurer did not properly interplead its remaining policy limits because the amount subject to competing claims was less than the total amount interpled. Doublevision Entm’t, LLC v. Navigators Spec. Ins. Co., 2015 WL 5821414 (N.D. Cal. Oct. 6, 2015). Further, because interpleading the remaining policy limits… Continue Reading

Tenth Circuit Holds that Implied Duty to Investigate and Initiate Settlement Negotiations Does Not Extend to Excess Insurer

Posted in Bad faith/duty to settle, Consent to settle/incur defense costs, Excess insurance/exhaustion
The United States Court of Appeals for the Tenth Circuit has held that while a primary insurer may owe its insured a duty to initiate settlement discussions under Oklahoma law, that duty does not extend to an excess insurer prior to exhaustion of the underlying coverage. SRM, Inc. v. Great Am. Ins. Co., No. 5:11-CV-01090-F… Continue Reading

Insurer Not Required to Advance Defense Costs Under A-Side Policy on Pro Rata Basis with Underlying D&O Policy

Posted in Defense Costs, Excess insurance/exhaustion, Other Insurance
In a victory for Wiley Rein’s client, a federal district court has held that an insurer is not required to advance defense costs under an A-side policy as long as it is advancing defense costs under a D&O liability policy issued for the same policy period. FDIC v. Gálan-Álvarez, 2015 WL 4887578 (D.P.R. Aug. 17, 2015). Wiley… Continue Reading

Equitable Subrogation Allows Excess Insurer to Recover Settlement Contribution from Later Insurer After Proper Policy Period Is Determined

Posted in Excess insurance/exhaustion
A California federal court permitted an excess D&O liability insurer to pursue equitable subrogation against a later excess carrier to recover its contribution to a settlement of securities litigation after a finding that the securities litigation was first made during the later carrier’s policy period. Genesis Ins. Co. v. Magma Design Automation, Inc., 2015 WL… Continue Reading

Excess Carrier’s Unrestricted Payment to Primary Carrier Creates Doubt as to Whether Primary Policy Was Exhausted

Posted in Allocation, Excess insurance/exhaustion
The United States Court of Appeals for the Tenth Circuit, applying Texas law, has held that an excess carrier for one policy period could not seek contribution from the excess carrier for a second policy period because the first period’s excess carrier could not prove that the second period’s primary layer was exhausted.  Scottsdale Ins.… Continue Reading

Umbrella Policies Triggered Even When Underlying Policies Exhausted by Payment of Damages Not Covered by Umbrella Policies

Posted in Excess insurance/exhaustion
Applying Texas law, the United States Court of Appeals for the Fifth Circuit held that umbrella policies were triggered when underlying policies were exhausted by payment of damages covered by the underlying policies even though those damages would not have been covered by the umbrella policies.  Indem. Ins. Co. of North Amer. v. W&T Offshore,… Continue Reading

Primary Insurer’s Bad Faith Refusal to Settle Within Primary Limits Not Actionable Where Excess Insurer Could Not Prove It Would Have Accepted the Offer

Posted in Bad faith/duty to settle, Excess insurance/exhaustion
The U.S. Court of Appeals for the Eleventh Circuit, applying Florida law, has held that an excess insurer could not prevail against a primary insurer for bad faith failure to settle when there was no evidence that the excess insurer would have agreed to the proposed settlement.  Westchester Fire Ins. Co. v. Mid-Continent Cas. Co.,… Continue Reading

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

Posted in Excess insurance/exhaustion, Other Insurance
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… Continue Reading

New York Court Rejects “Gap-Filling”

Posted in Excess insurance/exhaustion
A New York appellate court held that an excess policy was not triggered by settlements in which the underlying insurers only paid a portion of their policy limits and the insured “filled the gap.”  Forest Laboratories, Inc. v. Arch Ins. Co., 2014 WL 1673096 (N.Y. App. Div.). … Continue Reading